[insurance] mortgage creditor vs. term life

Mortgage Creditor Insurance

vs.

Term Life Insurance

By REMIC – Real Estate & Mortgage Institute of Canada

Mortgage Creditor vs. Term Life

Underwriting

Mortgage Creditor Post-underwritten

Term Life Pre-underwritten


Convenience

Mortgage Creditor Quick and easy to qualify

Term Life May require medical

investigation, lengthening

the process


Portability

Mortgage Creditor None

Term Life Independent of a lender


Premiums

Mortgage Creditor Level

Term Life Level


Amount of Initial Coverage

Mortgage Creditor Determined by the amount

of the mortgage

Term Life Determined by the insured


Protection on default/illness

Mortgage Creditor If the borrower defaults or

cannot make his or her

mortgage payment, the

insurance will cease as the

insurance is tied to the

mortgage payment

Term Life As long as the insured can

pay the insurance

premium, the insurance will

continue, regardless of

whether the mortgage

payment cannot be

made.


Expiry

Mortgage Creditor When the mortgage is

paid or upon transfer to a

new lender

Term Life At the end of the term


Beneficiaries

Mortgage Creditor Lender

Term Life Named by the insured


Number of Death Benefits

Mortgage Creditor One, the outstanding

balance of the mortgage

Term Life If two homeowners are

insured and there is a

common disaster where

both are killed, two death

benefits are paid.


Speed of Claim Payment

Mortgage Creditor Can take up to several

months due to insurer

investigation

Term Life Paid within days