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Financing, Mortgages and Insurance What options are best for you and your situation?


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  #1  
Old 2011-09-01, 08:52 AM
copper copper is offline
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Default Insurance with Mortgage

Just want to post my recent experience with signing for my new mortgage. Yesterday we had an appointment with our bank to sign the papers for our mortgage for our new home. We were not impressed, we have been dealing with our bank (the green one) for 20+ years. When we sat down she passed us the papers to sign and we thought the monthly payment was what we were expecting, until we read further and noticed that it did not include our property tax. She then went on to discuss that we were fully covered insurance wise, we told her that we are declining the insurance and the sale pitch continued for a few minutes and there was attempt at guilting us into getting the insurance so the family was protected. I cut her off and told her we don't want it. She then remove the insurance and re-printed the paperwork and the monthly payment dropped by $470.00. At this point I was pissed gave her a blast and we almost walked.
I know very little about insurance but my opinion on doing this through the bank is itís a scam, especially when its presented in the manner as it was. We are still pissed about the tactics and how they went about this, there will be a call to the regional branch manager this morning.
I'd recommend that people figure out your insurance requirements before you go to sign your papers with the bank to make sure you get the best value for your money.
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Old 2011-09-01, 09:04 AM
PJD PJD is offline
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There's been lots of discussion about this on this forum already but basically you did the right thing. Mortgage insurance is indeed a scam. The underwriting is done only if and when you make a claim! So you may pay premiums for years and still be declined because you were diagnosed with something late in life, by the time you claimed. They find every excuse in the book to decline your claim anyway. And I agree with you, the way the bank goes about it is unethical at times. I remember when I declined mine, my rep who I'd been dealing with a long time got angry. I looked at him like: are you for real there? But it's more bonuses for them the more people sign.

Insurance is important though, so look into it but get term insurance where the underwriting is done at the beginning so you will not be paying premiums unless you are approved at the beginning.
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Old 2011-09-01, 09:50 AM
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gerapau gerapau is offline
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I am not sure I would go quite as far and call it a scam. A bad investment for sure but not really a scam.

My understanding does not quite jive with what PJD said though. While the underwriting is only done if/when you make a claim I don't believe that you can be declined simply because of something that you were diagnosed with after you purchased the insurance.

Now, if you had a pre-existing condition when you applied for the mortgage insurance, or didn't answer every question in the insurance application forms 100% truthfully then you (or your family) may end up finding out in the event of your death that you weren't covered even though everyone thought you were. With regular term insurance you will know right away if you are covered or not when you apply and can make alternate arrangements if you do not qualify. With the mortgage insurance it is too late to make alternate arrangements because you are dead!

I do agree though that mortgage insurance is a really bad investment (for many reasons) and you are much better off with term life insurance.
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Old 2011-09-01, 12:16 PM
PJD PJD is offline
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Default CBC Marketplace episode on Mortgage Insurance

Watch this:

http://www.cbc.ca/marketplace/in_denial/

Very informative.
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Old 2011-09-01, 02:01 PM
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gerapau gerapau is offline
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Originally Posted by PJD View Post
Watch this:

http://www.cbc.ca/marketplace/in_denial/

Very informative.
It does open your eyes but none of these people were refused because of something they were diagnosed with after they purchased the insurance.

Most people who are refused are usually refused because of problems (however minor) that they had prior to applying for the insurance but did not disclose on the application. In many situations the applicants don't "not disclose" the information on purpose but often just forget.
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Old 2011-09-01, 05:07 PM
R.F.D. R.F.D. is offline
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Copper, unfortunately your complaints will likely fall on deaf ears, insurance is a very large revenue stream and the lenders are trained in methods generally how you described. Not to be too invasive, but to get premiums of that size your mortgage amount and/or age are possibly higher and possibly smokers? 479.00 seems alittle outrageous unless your premiums also included riders like disability, loss of employment and critical illness.
I remember the CBC story well and it caused a whirlwind of questions from policy holders. Something that all individuals should understand though is that even though insurance companies in Canada are "regulated", there method of resolving claims can vary greatly and this is usually where you will find a significant difference in premiums. No frills insurance vs full service insurance providers, which companies will dig very deep and hard to prove you screwed up somewhere. Big bank insurance can be questionable for lack of a better term and is a perfect example of if you are not healthy you are not getting insurance.
If anyone is getting insurance through their bank or credit union and if at anytime a lender tells you just to answer no if you are unsure this is vERY bad advice and selfish on their part and yes likely to get the sale. If unsure answer yes, let the underwriter determine if you are insurable and if the condition is not of concern it will not impact you or your premiums, however in instances where there may be concern you may get the insurance with a PEC (pre existing condition clause) or offered substandard premiums, either way be honest, there is no point in paying premiums only to determine at a later time that you have been denied.
Smoker question, if you have smoked in the last (usually) 12 months and yes that includes everything smokeable, answer yes, if you quit great, if you started up after you legimately quit it depends on your insurer, some actually don't hold it against you for sparking back up.

**Keep in mind the CBC story made for good TV.
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Old 2011-09-01, 05:55 PM
PJD PJD is offline
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But gerapau, don't you think that a product that asks you to pay premiums for years without being sure that you could claim for benefits, and one that leads people to believe that they are covered, just to discover in their time of need if they qualify is a scam? Or if you find that too strong a word, still shady?

I say shady because I am sure we could poll a ton of members on this forum alone, myself included, and when this was sold to them no one ever explained that the underwriting was done only at the time of claim. I paid it for a few years myself on my first mortgage. I remember finding it funny that I was not sent for a medical but sadly did not question it any further. I just assumed since it was legal it must be ok. Someone out there must be protecting our best interest. After all, this is Canada? Well, fast forward a few years later and I am little wiser I don't think this is a very good product, nor do I think it is in the best interest of the consumers, or that they disclose this information to you at the time that they try to convince people to sign up at the bank.

With term insurance on the other hand, you will not pay premiums unless you are approved, hence if you are approved you have piece of mind. No?

We both know that it's not because something is legal that it is good for you or that all the information is properly presented to you at the time of sale. I think the guy said it well in the CBC piece where he stated that the questionnaire sets people up to fail. Things should never be developed so that only "smart", "well educated", "sharp", people get it. That is not kosher to me.
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Old 2011-09-08, 05:01 PM
Tara Wilkins Tara Wilkins is offline
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I thought I would just make a quick post, as I work for a Bank, and the "Green One"...

I am extremely sorry that you felt pressured by your sale representative, and that they seemed to do it a little hidden from you. I know that it can be very frustrating to think your Mortgage payments are set, and then to hear some outrageous amount during the branch sign off, all because your rep is not explaining things properly. They should NEVER assume you are just going to take the insurance. They need to fully explain it to you, both pros and cons of the product, and let you the client decide whether or not you want the product.

There has been a lot of discussion about Mortgage Insurance and Term Insurance on this forum. I will say $470.00 per month is a lot for Mortgage Insurance and Critical Illness. The green banks insurance does include Critical Illness in our product. If you were to research the cost outside by another lender, I can say 90% of the time, our Critical Illness is cheaper then by any other provider.

Honestly Mortgage Insurance depends on YOU and what your needs are. I sometime will recommend it to my first time home buyers, who are in their early 20s, and it costs them about $20.00 a month. They do not have term insurance, and they do not pay for Critical Illness insurance outside of their employment or bank. So in this instance - I think it is totally worth the money.

However, when your mortgage is over $350,000, and your age is above 35, Mortgage Insurance through the banks can be quite expensive. So I do recommend to shop around, and figure out what policy works best for you.

My husband and I personally have term insurance for 30 years, plus we have Mortgage Insurance through the green bank. It costs us $30 a month for both of us. I know that if anything happens to either one of us tomorrow, my house will be paid in full, and that will allow our term insurance to be used for savings, and resps for our children.

So again, do your research. A mortgage is the largest investment in your life, re-evalutate it and find what works for you!!! Good Luck!
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Old 2011-09-09, 09:54 AM
mrm mrm is offline
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I think it's important to shop around and get underwritten any time you are purchasing life/critical illness insurance.

It's all about risk management. Insurance offered by the banks and lenders can be a solution, but more often then not, using an indy insurance advisor (that you are comfortable with) is probably your best option.

PM me, I can get quotes if interested.
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Old 2012-02-11, 02:48 PM
DarrenHD DarrenHD is offline
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Quote:
Originally Posted by mrm View Post
I think it's important to shop around and get underwritten any time you are purchasing life/critical illness insurance.

It's all about risk management. Insurance offered by the banks and lenders can be a solution, but more often then not, using an indy insurance advisor (that you are comfortable with) is probably your best option.

PM me, I can get quotes if interested.
I think it's important to really think about if you REALLY need insurance. Insurance is just that "insurance". For most people it is just throwing away money each month. You might already have insurance through your benefit plan at work.

I recently signed a mortgage with a bank and they tried to pitch me - pretty strongly - the insurance. I already have coverage through my work - enough to pay off the mortgage and then some, so I declined.

I'm not a fan at all of insurance. I pay 200/month for two cars for years and for me it has been a waste of money. Yes, it is there if something goes wrong, but personally I hate paying it each month when nothing goes wrong.

So for me I try to minimize insurance costs as much as possible and decline to include it whenever I can because most of the time it is wasted money for most people. I don't purchase extended warranties either as studies have shown this is a cash-cow for stores - again most of the time.

I'm not saying never purchase insurance, just think really hard about it and don't blindly get it.
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