Mortgage Insurance vs Term Life Insurance: Making the Smart Choice for Your Family's Future
As a trusted Canadian insurance brokerage with offices across Ontario and Alberta, we at AIM Insurance often get asked about the differences between mortgage insurance and term life insurance. While both products seem similar at first glance, there are crucial differences that could significantly impact your family's financial security.
Let's break down these differences and explore why term life insurance often provides better value and flexibility for most Canadian families.
Key Differences at a Glance
1. Who Gets the Benefit?
- Mortgage Insurance: Pays directly to your mortgage lender
- Term Life Insurance: Pays to your chosen beneficiary, giving them control over the funds
2. Coverage Amount
- Mortgage Insurance: Decreases as your mortgage balance decreases
- Term Life Insurance: Maintains the same coverage amount throughout the term
3. Flexibility
- Mortgage Insurance: Tied to your mortgage and lender
- Term Life Insurance: Stays with you regardless of housing changes
When it comes to Protecting your Mortgage, You have a choice. Get coverage through your Mortgage Lender or make use of your Own Term Life Insurance
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TERM LIFE INSURANCE |
MORTGAGE INSURANCE |
| Do you get to pick the beneficiary? |
✔
|
x
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| Is it convertible? |
✔
|
x
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| Can you keep it if you move? |
✔
|
x
|
| Are you in control? |
✔
|
x
|
|
Cost Effective
|
✔
|
x
|
|
Coverage Decrease overtime
|
x
|
✔
|
Protect Your Mortgage with Term Life Insurance and get Coverage That protects more than just your Mortgage Balance.
Benefit -
With life insurance, though, you get mortgage protection and more. Here’s how it works: Every life insurance policy provides a tax-free death benefit to the beneficiary. This money can cover more than just the mortgage. Your beneficiary may use the money for any purpose. For example, along with paying off the mortgage, the money could also cover:
- Any other debts you have
- Funeral costs
- The cost of child care; and
- Other living expenses.
Why Term Life Insurance Often Comes Out Ahead
At AIM Insurance, our experienced team, including our Managing Director of Commercial Lines, Mandeep Singh, consistently advocates for term life insurance over mortgage insurance for several compelling reasons:
1. Greater Control and Flexibility
Term life insurance puts your family in control of the money. They can choose to pay off the mortgage, invest the funds, or use them for other essential needs like education or healthcare. This flexibility isn't available with mortgage insurance, where the payout goes directly to the lender.
2. Better Value for Your Money
With mortgage insurance, you're paying the same premium amount even as your coverage (mortgage balance) decreases. Term life insurance maintains the same coverage amount throughout the term while your premiums remain level. This means you're getting more value for your insurance dollar.
3. Portability
Planning to move or switch mortgage lenders? With term life insurance, your coverage moves with you. Mortgage insurance, however, is tied to your specific mortgage and lender. If you change lenders, you'll need to requalify for new mortgage insurance, potentially at higher rates due to increased age or health changes.
4. Broader Protection
Term life insurance can be structured to cover more than just your mortgage. As a family-owned brokerage, we understand the importance of comprehensive protection. Our team can help you determine the right coverage amount to protect all aspects of your family's financial future.
Expert Tip from AIM Insurance
"When clients understand they can get more coverage, more flexibility, and often better rates with term life insurance, the choice becomes clear," shares our life insurance specialist at AIM Insurance. "We've helped countless families across Ontario and Alberta secure their financial future with customized term life insurance solutions."
Additional Benefits of Term Life Insurance
1. Tax Benefits
The death benefit from term life insurance is tax-free to your beneficiaries, giving them the full value of your coverage.
2. Multiple Policy Options
At AIM Insurance, we offer various term life insurance options, including:
- Term 10, 20, or 30 years
- Whole life insurance
- Key person planning for business owners
3. Customizable Coverage
We can help you combine different insurance products to create comprehensive coverage that meets your specific needs, whether personal or business-related.
Making the Right Choice
While mortgage insurance might seem convenient when you're signing your mortgage papers, taking the time to explore term life insurance options could save your family money and provide better protection in the long run.
As a 100% Canadian-owned and operated brokerage, AIM Insurance is committed to helping you make informed decisions about your insurance needs. Our team of licensed professionals can walk you through various scenarios and help you choose the coverage that best suits your family's unique situation.
Ready to Explore Your Options?
Don't leave your family's financial security to chance. Contact AIM Insurance today to discuss your life insurance needs. Our experienced team is ready to help you understand your options and find the right coverage for your situation.
Call us at 877-AIM-4TMW or visit one of our convenient locations in:
Remember, when it comes to protecting your family's future, having the right insurance coverage makes all the difference. Let AIM Insurance help you make an informed decision about your life insurance needs.
