Life Health Professional forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Mortgage life insurance labelled “junk product”

Notify me of new replies via email
Life Health Professional | 08 Dec 2014, 12:57 PM Agree 0
One of the country’s leading financial journalists is saying what many advisors have long believed about mortgage life insurance.
  • Kevin O'Brien CFP, CDFA | 16 Dec 2014, 04:11 PM Agree 0
    Important point
    Many Canadians are carrying mortgage debt beyond their working years or are converting consumer debt to Lines of Credit. It's important to note that life insurance coverage is needed to cover these debt. When shopping for insurance to cover a mortgage, remember the insurance need may extend beyond the term of the mortgage. Many companies offer 20 year, 30 year and lifetime term insurance coverage.
  • C. Edwin Chung CFP | 11 Jan 2015, 02:58 PM Agree 0
    As a Certified Financial Planner, I tell people that the need for insurance never dies! When we are young life insurance is least expensive, but to many wait until they marry or buy a home before they realize the need for life insurance. Now the cost is much higher than if it was purchased before needed. Looking at life's necessities, life insurance is one of them and when bought early it can often be used as collateral. Once your house is paid for, you might have some other debt that needs to be addressed (capital gains/taxes) where insurance will be of benefit!
  • DWayne | 15 Jan 2015, 12:59 PM Agree 0
    You do not need insurance all your life, you only needed it while you have debt/dependents! Get Term, stay away from Cash Value-Permanent Insurance (Whole Life, Universal Life, Term to 100) as those products only benefit the agent as they get 8-10 times the commission then providing term for their clients. Get term, and the money you save invest! Would you rather have insurance or a big chunk of cash?
  • Gur Brar CLU,CHFC,CHS | 16 Jan 2015, 11:50 AM Agree 0
    Purchasing Mortgage Insurance directly from an Insurance Company (through a Broker or an Agent) makes a lot of sense for people with Mortgages. Usually, Renewable and Convertible Term Life Insurance is the best option under the circumstances (cheaper coverage for a specific period). Complete medical underwriting is done at the time of issue, thus avoiding any potential problems at claim time. Another big advantage which is usually overlooked, is that even after paying off the Mortgage the Policy could continue and be converted in to a Permanent life protection if desired (this option is not available with the Banks).
    In other words for peace of mind, it is always advisable to have an independent guaranteed coverage for your mortgage protection. The Bank`s coverage only protects the Mortgagee (the lender) and not the Mortgagor (the borrower).
  • Tim. | 19 Jan 2015, 06:10 PM Agree 0
    Seriously? This debate was over 20 years ago...

    Mortgage Life Insurance is underwritten after death - giving the insurers great ability to find a way to disallow the claim, at a time when you are no longer around to fight them and their twisted logic.

    Real Life Insurance is underwritten before they let you buy it. That makes it really simple, if you die, it pays. Period.

    Oh yes, assuming you had a 100k mortgage, and died, the Mortgage Life Insurance goes to the bank - maybe even at a time your family could have used some money. Real Life Insurance? They come with a cheque for $100k, no strings attached. If your family wants to pay off the mortgage do so, or use it for other costs - who knows if the house will be kept in the family in any case?

    The point is, Real Life Insurance is useful if you die, Mortgage Life insurance is useful for the banks, and for the agents that make big commissions selling it.
  • GeorgetownGuy | 20 Jan 2015, 03:39 PM Agree 1
    I think C. Edwin Chung captured the sentiment very well. The need never really dies and should actually be considered much earlier in life than most people tend to consider. But, it's also something that must be continually re-evaluated (like tuning your car or getting a regular medical checkup).
  • Scott | 18 Feb 2015, 02:12 PM Agree 3
    This is to DWayne's comments regarding the need for life insurance...nobody needs life insurance, they will die just fine without it. To your last comment... I "want" both the insurance and a big chink of cash. Wait, I already have that. You see, I purchased a properly structured participating whole life insurance program over 20 years ago from an isurance professional and have bought more since. It's been one of my best performing "safe money" assets in my investment porfolio. My yields are north of 4% (without tax)...so thats like earning 7% somewhere else, my cash values are guaranteed to go up every year, the volatilty of it has been less than a 10 year government bond, I have had more borrowing capacity with it when used as collateral (compared to "all" of my other investments). I've purchased and sold properties with this asset when used as my down payment. This has added significant wealth to my overall investment portfolio which I attribute to having access to cash when I needed it. Oh and by the way, when I die, my business will get a "multiple" of my cash value tax free to pay for my tax liabilties. If structured properly my accoutant tells me some, if not all of this could be passed to my wife as a tax free dividend. Sorry DWayne, I think you have been misled...
  • Emma | 02 Mar 2015, 02:06 PM Agree 0
    Sorry Scott but you're the one that's off here! You should do some more research about buy term and invest the difference you always get a better value for your dollar! You can get a much higher return in a safe way and still have it tax free if you were actually dealing with the right advisor vs an insurance agent that is taking growth away from you and adding it to his/her own pocket and everyone on here should not even consider cash value insurance as an option and should really do some proper research as to how have proper coverage while they need it and how to build real wealth outside of insurance were you can get returns like 8,9 and 10% and not have to borrow your own money at interest if you need it as its all very known that the cash value doesn't belong to you but the company. To access it you have to borrow it and on top of it when you die your family only gets the death benefit as it is a whole life policy like you said. The only advice I will give to everyone here is do your own research not from a life agent but 3rd party like Suze Orman who has her own tv show on cnn, I think she is credible or the wealthy barber and personal finance for dummies is a great source as well. any book that's not written by a life agent will be a great source for research.
  • 25 year veteran CFP | 03 Mar 2015, 02:29 PM Agree 1
    I can't believe this debate is happening between insurance "professionals". Yes, creditor owned life insurance is junk. Term insurance is wonderful for temporary needs. Permanent insurance is great for permanent needs; and also has some very cool uses for business owners. Whole life insurance over the past 20 years has been a very good investment, when compared to a similar low risk taxable investment like GICs. And anybody who advocates a one-size fits all mantra like "buy term and invest the difference" needs to stop drinking the Primerica / IG kool-aid and get some education.
  • Jack Handy | 09 Mar 2015, 07:45 PM Agree 1
    This is Canada...not the States. We have participating policies, so stop watching Suze Ormon.

    If someone is 30 years old, with a new mortgage, and a needs analysis determines a need for 500K in insurance, there is nothing wrong with 25 or 50K in whole life or universal life, and the rest in term. 20 years from now the mortgage will be drawn down significantly so let the term lapse. The whole life will have grown in value and can take care of any estate planning needs when the time comes. Your spouse will be relieved.

    Maybe you have a newborn. Hmm...how about a 250K 20 Pay Whole Life policy with paid up additions? RESP's will only go so far. You control the policy and determine when your child gets it. Post Grad? Business? House? Retirement? Etc. Your child is insured for the rest of her life and the policy pays for itself by year 20. So many options for her, yet you make the call.

    These are just two simple examples...educate yourself before you embarrass yourself.

  • Rsilva | 10 Mar 2015, 06:23 AM Agree 1
    I believe products exist for a reason. I don't agree with UL/permanent not being a viable solution in certain circumstances, just how term is viable in certain circumstances. I definitely wouldn't be classifying the reason it's offered is only. based on high commissions. Dismissing products and labeling agents makes the industry look bad. A dedicated agent will explain the differences to your client and know when and how to recommend it.
  • fiscally fit | 19 Mar 2015, 04:48 PM Agree 1
    Anyone that makes a blanket statement that only one strategy or product works has no idea what they are talking about (besides the teriible creditor insurance). The different insurance types are just just that... different. Evaluate your situation and make the choice based on what is right for you and your situation. I have term, Partcipating, whole life and paid up insurance. Each has a specific use in my situation and I evaluate everything regularly. This is just like the TFSA vs RRSP debate. One is not better than the other... they are completely different tools that you can utilize if you choose to.
  • wow | 24 Apr 2015, 08:06 AM Agree 1
    It looks like you have a problem with Life agents ? we provide options including investments its no wounder the consumer has concerns in our industry.....
  • silvia | 21 May 2015, 09:02 PM Agree 0
    True!
    I do the same here!
  • silvia | 21 May 2015, 09:03 PM Agree 0
    True!
    I do the same here!
  • napolean | 29 May 2015, 11:49 PM Agree 0
    Does it make that much of a difference? If your mortgage is paid off, couldn't you presumably (and easily) get a secured line of credit based upon your home equity?
  • Old Timer | 17 Jun 2015, 06:14 PM Agree 1
    "Life agent" is being used here quite a bit. I would say that a "life agent" is just that, a person who sells life insurance, some one who has chosen to be a sales person not some one who understands the business. Thus you sell term insurance and that's all you know. An "Advisor" on the other hand is some one who knows all of the options and offers whatever is best to the person who needs the product and the advise. Mortgage insurance is terrible for the person, good for the banks. Term insurance is a temporary type of insurance that the individual rents for their immediate needs, permanent insurance is for those permanent needs. My question to the "buy term and invest the difference" is how many people actually save that money and never touch it until it is needed? in todays environment where can you get safe money that earns more than inflation? You're living in a fools paradise if you think that that system actually works more than 5% of the time (if that). I'm not just blowing smoke because I've been in the Advisor business for thirty years.
  • Sherry | 30 Jun 2015, 01:23 PM Agree 2
    Please have people watch the episode called IN DENIAL from CBC Marketplace! Then let's talk about Mortgage insurance!
  • Stephen | 15 Jul 2015, 08:52 AM Agree 1
    Oh Emma, i think you need to go back and do some more research if Suzy Ormond is your source. Sorry but she is not credible. And 8 to 10%? Who is feeding you this. If you are going to try and speak with some authority on the subject you better find better resources. You must be talking to the banks who have been telling people for years 8 to 10 % and they have no fees. Try again.
  • LIG | 15 Jul 2015, 01:06 PM Agree 1
    Old Timer:

    I am a life insurance agent as that is what I am licensed to do and what I am paid for. I would note that I too have been in the insurance business for well in excess of 30 years and have been giving advice to clients wrt insurance plans and planning throughout that period. Some of that advice has been to purchase term life insurance, but in other cases and for other clients it has been to buy a combination of term and whole life, or disability income replacement, or critical illness insurance, or group insurance coverage, or just whole life insurance, always dependent on the need and client's circumstances. I have never, ever, advised anyone to buy term and invest the difference, although there are short term needs for which that advice may be appropriate.

    IMPO advisor is a generic term for those who are trying to be all things to all people. I am not and do not. I only give advice about insurance and even then, only about a fraction of the products that I am licensed to sell. This is because, again IMPO, no-one can be expert in all things and few are even competent when they try to do so. (and yes, I use specific engagement letters that allow clients to engage me only for those areas in which I feel myself to be qualified and competent)

    ATB

    LIG
    Lawrence Ian Geller
    geller-insurance.com
    moderator - foradvisorsonly.com


  • InsuranceWiz | 25 Jul 2015, 11:35 AM Agree 1
    i disagree with your black/white assessment....it completely depends on the client and their future goals....for instance, a small permanent policy might be applicable for final estate expenses...also small permanent policies are great for kids, as you can add future insurability guarantees and have the policy paid up in a set number of years....so for all readers, don't take it one way or the other, sometimes the middle way is the right way....
  • Brett D. Rees Advisor | 05 Aug 2015, 06:15 PM Agree 1
    Also the bank now have limits on the amount of coverage they will give ranging from $ 500,000 to $ 650,000? When I spoke to a bank representative I mentioned I was looking for a house in Toronto and that the mortgage would be in the vicinity of $ 1,000,000. How much would insurance cost me. "Well we can only sell you $ 500,000 of coverage, that is our maximum. Didn't seem to interest the person I was purchasing a house in excess of a million dollars and they wouldn't be bale to insure all of my risk? Cannot believe people are stillbuying this product.
  • B. Keith Neely | 26 Aug 2015, 10:27 AM Agree 1
    Permanent insurance? If someone in today's instant society has the self-discipline to plan for the future permanent insurance is very very rewarding. I recently had a client -a boomer-whose adult children challenged their mother's monthly payment of about $115 month, for about 5 more years on a 10 year quick pay product. The children were happy to know that guaranteed to the penny, every 1 dollar their mother was investing would pay out to them about $2.50. (the numbers are exact and guaranteed- my "about" is because I am not taking the time to look them up) As well, on participating products, the non-guaranteed portion can be multiples of the guaranteed amount after a few decades. 150 years or more of unfailing dividends being paid into someone's investment is a big thing in today's volatile investment world and 1% GICs. aka, check the numbers for yourself- i haven't looked recently but depending on age and time, a $25,000 whole life product, might cost a total of $15,000 to pay for but could be worth $100,000 later in life. Down the road the owner of the policy can borrow against it (eg from a bank) if they need/want the money while still alive. They can also take some of the money out and borrow against the policy at a higher rate. But we must have a client willing to pay out now for something that may not benefit him/her for 3 decades or more.
  • Elwood_B | 27 Aug 2015, 10:35 AM Agree 0
    I suspect Emma works for a certain company that paints every client with the same "buy term, invest the difference" brush. I've personally witnessed the disastrous after-effects that "advisors" from this company have had on their unsuspecting clients.
    Any advisor who provides advice that is the same for everyone is not serving the best interests of their clients. It saddens me that uninformed people like DWayne will back up their ill advice.
  • Chris S | 10 Sep 2015, 01:14 PM Agree 0
    I'm glad you replied so I didn't have to.
  • DAve | 22 Dec 2015, 05:00 AM Agree 0
    Primerica not IG . IG consultants sell whole life as well as term.
  • Dave | 22 Dec 2015, 05:05 AM Agree 0
    Still working at Primerica?
  • Bob | 18 Mar 2016, 03:31 PM Agree 0
    Bravo!!! Please keep sharing your story! haha from an advisor :)
  • Dick | 19 May 2016, 09:21 AM Agree 0
    8 years ago, my wife and I bought a 2,000,000 joint last to die life insurance policy. The purpose is to pass an inheritance to our sons, and ensure that we use our cash savings for retirement income. The premium is $500 per month and will be paid up in 20 years. We have a guaranteed interest rate in the plan of 4%, on which we are not taxed. If I were to invest $500 per month at 5 net 3% after tax for twenty years and leave the balance to my life expectancy, say 85, it would grow to around $300,000. There is a substantial gain for my estate using life insurance. Whether you buy term or permanent, get good advice form an insurance professional. They don't work in banks. If you are concerned about commissions, ask the advisor how he is paid. I have had the same trusted life insurance advisor for 30 years. Like anything else, there are good ones and bad ones. Do your research.
  • Jesse | 30 May 2016, 02:57 PM Agree 0
    Emma & Dwayne,

    If you've been in this business long you really can't honestly believe that. I know it is amazing what you can get a person to believe before they have actual experiences, however once we experience something and Become experienced at something we tend to regard that more as truth. That said, I guess we can assume that at the time of writing you were not in the business long. Due to the age of this post and the 95% failure rate it's also likely that you're now out of the business.... Or one of the strange folk (and I'm playing here) that have fully submitted to ALIBI ( the Arthur L. Institute Brainwashing for Idio..... )* .

    I want to put this to bed forever. At one time and for a limited time, buy term and invest the rest actually would have made some poor people a little less poor than buying whole life would have. Those with any wealth would never have benefited from this ridiculous marketing slogan. Let's start with the most obvious reason why buy term and invest the rest is BS.

    1) Wealthy people own permanent insurance.... Hello? Any bells going off ? Who uses teams of smart trained professionals to help guide them to ongoing perpetual wealth? Permanent insurance allows wealth to accumulate tax free, it has virtually zero risk and typically what I've seen over 1000 times is it's the only smart passive investment wealthy people own. In addition when you use you're corporate entity (CCPC) as the owner (and possibly beneficiary) you can save 32% income tax your first $500,000. So you pay 11.5% tax now and never pay tax again. It grows every single year guaranteed, there is no tax on the growth and it spends tax free in retirement. Oh and it pays out millions to your children for charity see you can actually make a difference in other people's lives as well.
    A far more intelligent analogy would be if you were a farmer would you want to pay your tax on the harvest next fall or on the seed now in the spring? Stupid question right? Who still buys RRSP's? Sorry folks. What we are honestly saying here is Ms. Or Mr. Client, we can do one of two things. I can put you in scenario A  where neither of us has any control over it its completely at risk, We have no idea what your return will be and your partner with the government along the way because they're going to takeA third to half of The money when you want to actually use it. Oh also we will try to but you and safer investments at the right exact time near your retirement but not too soon because then you will get no return on the money and you'll be burning up your capital quickly in retirement

    . Or scenario B we can have a plan and investment that has been Close to average market returns overall, Produces a positive return each year, is tax-sheltered forever, you never have to worry about your money being risk and it will penetrate your wealth for generations to come. You're absolutely guaranteed to successfully retire based on our assumptions. Ahhhh. Ms. client which scenario do you like? Should we call a friend?
    Yes it is that ridiculous. I am also CFP. Who cares. I know many successful advisers who are not. Successful advisers typically deal with people have money. Not coincidentally they also sell large permanent life insurance policies to perpetuate preserve and guarantee wealth.



    2) If in doubt follow the Leader. Smart people view term insurance as an after-tax expense that increases over time. That's it. It robs you of your wealth.There's a 3% chance you 'win' and die and a 97% chance the insurance company wins ie. Wealthy people such as Warren Buffett. Does Warren Buffett buy term insurance? No. Does Warren Buffett by insurance companies? Yes.

    3) For Business Owners (shareholders of CCPC's ) Permanent insurance 32% in income taxes with HOLDCO owning cash value, OPCO owning the DB or shared ownership with the corporation owning the death benefit as well as being the beneficiary of the death benefit and the individual owning the cash value. The company can find the majority or all of the premiums in the owner can receive the benefits of the cash value tax-free. Yes this can be done and yes legally. We do it all the time please do not tell me theoretically such and such whatever. If your clients are not owning their investments through corporations they likely should be. Or should have it as a goal in the future. If not how are you educating clients? If you were saying by term investor rest and I will invest this money for you, Then you should take on all the risk for them to retire well. After all that's your job isn't it? We pay plumbers that don't do their job? I can guarantee my clients a solid guaranteed return which after tax Will be over double the retirement income of traditional methods. Can you guarantee your clients? You can't if you're touting the ridiculous fable by term and invest the rest. Consider that you should be held accountable for your client's financial stability.


    3) 95 % of wealth is owned and controlled through corporations, Trust etc. What do they hold? Active investments such as businesses and real estate. These assets perpetuate wealth do not diminish while you receive your retirement income I can pass on the next-generation once the estate tax bill is paid. I really hope we don't have to argue about what the best way to pay the estate tax bill is (capatial gains)? Yes permanent life insurance. Buy such a margin and with no risk there's absolutely no intelligent person who wouldn't agree with this. You must understand active versus passive investments. IMO it is ludicrous to own passive investments it fluctuate like crazy. Why? If you want to risk your money then you should A) Control it (the asset) and B) be paid huge returns. A minimum of 30% however several times that would be preferable.

    I often hear, my clients are only interested in investing passively. So we need the risk of the market for the higher returns. Please please don't say this anymore. I understand there are people that want to invest passively only and that is fine. However why wouldn't you pick and Investment class that is completely safe yet provides a high after-tax long-term return? Guaranteed.
    FACT: when including the taxation benefits participating whole life as always beat the market over any time period with no risk. Why do the wealth keep getting wealthier and not I Have to worry a bit about future cash flow?
    FACT: you need to factor in the cost of risk. Do you not choose to go down to 2% or less return to purchase a guarantee in retirement? Whether this is 7% or 5% you are sacrificing (apparently) this potential difference in return correct? So why do we not look at it earlier on? What do you want to pay for your peace of mind? It's something.
    FACT: it's highly unlikely that you are even closest to tracking the market for your client portfolio with mutual funds. Again likely you're getting less return fully exposed to risk then a PAR fund with billions in assets.
    FACT: Canada has some the highest fees and worst market-based investments in the world. It's estimated us Mutual funds have actually more like over 4% fees everything included and Canada's higher. Industry 1 -- Client ZERO.

    4) There is only one person that ever got wealthy from 'buy term and invest the rest'. I'll admit it was a genius marketing pitch by the Primerica founder but do you see anyone else at all getting wealthy from this? Please name anyone with an abundance mindset who thinks this way and has a significant wealth? I can't name one. That's because it's irrational and doesn't comply with the rules of wealth building. This statement comes from a poverty mindset to begin with. That is squirrel away money for retirement and hope it lasts until I die. The only person gaining significant wealth from this philosophy is Primerica founder Arthur L. Williams. I admit it was brilliant for him, however, if he's stubborn enough not to purchase permanent insurance to pay his estate tax bill and stick with his philosophy, Then fine. However I'm going to bet that he will be exercising his conversion options in The future from the advice of his CPA, Insurance agent CFP, Lawyer and any other professional is that even a minor introduction and more experienced in the estate planning field. There are no wealthy people follow this philosophy. If they do they sure as heck do not passively buy retail market-based investments and watch them yo-yo . I've met some wealthy people better originally hate the idea of insurance all together. Tell them not to think of it as life insurance to just run the numbers. If they're concerned I'm having their hard-earned passed on to either children or a suitable charity. Show me value and protects illiquid assets from massive or complete loss like life insurance. I realize that this little synopsisIs far from complete. If you need any of the backup data such as corporate and personal tax rate etc. Just let me know. Buy term invest the difference was a wealth building strategy for one man and I'll admit sure worked well for old Art.... Won't for you, or me or our clients.... One asset class hummed through the depression with POSITIVE returns and has been killing it for over 100 years. There's a reason...
    PS: Term Insurance is not an asset. It's an expense. Minus it from the 'difference' , oh and taxes , EI , WCB, CPP .
    PPS: We want to LOWER our clients fixed expenses in retirement (ie pay up life insurance not let it skyrocket in proce)

    PPS: Don't be selfish. Ie . The 'I don't care about insurance I'll be dead' . Never seen this guy rich. It's just yes, I can't wait and likely your family your financially stranding probably feels the same. Also , please take on smoking now that you're not bound by pesky premiums. When your only way to leave the world better is by leaving that's sad.

    PPPS: 'Invest the difference'? Clearly by nature you're an instant gratification fella so just be honest. Buy term and off to the pub, isf ar more likely what's happening here.

    Hope this helps clear the air on that old stinky garbage.
  • Jesse | 30 May 2016, 03:02 PM Agree 0
    sorry for the formatting and errors. I transferred it from word and didn't have much time left to edit. My apologies.
  • Jesse | 30 May 2016, 03:11 PM Agree 0
    Emma have a listen to Dick. (who is not my client BTW). This is what I strive for all my clients to say. And it's really the product that did all the work as he points out. You as the agent can't possibly be earning the return for the risk you take financially to be in this business. ie. your aim should be in 7 figure territory for sure. Not happening with 'buy term no one wins'.

    Tip: Go to MDRT. Qualify then try for court (3x I think) the Top (6x). I stopped going but it helped pull me out of the poverty mindset early on.
  • topth43 | 25 Sep 2016, 10:54 PM Agree 0
    Having Mortgage life insurance is making you guarantee security. It is a form of insurance specifically designed to protect a repayment mortgage. Actually I know someone have more knowledge about this line of insurance https://terencehouston.com/
  • Ami | 02 Nov 2016, 03:28 AM Agree 0
    The article should have been written more clearly. The phrase "Mortgage life insurance" should at least have been defined for context. In other words, the article would have been more informative to consumers if it defined the phrase as being the bank - sold life insurance which has numerous limitations and restrictions, and for which you may be approved for the payment of premiums; however, the question as to whether you are approved for the coverage is left to be determined in the unlikely event of a claim.

    In general, bank-sold "mortgage" life insurance is, in fact, an expensive "junk" product. An independent broker who is equipped with LifeGuide is able to shop the market for the solution that would best fit the need, at the lowest cost and with the most in terms of value. Moreover, a broker who has the consumer's best interests in mind and in heart will do her or his best to carefully guide the client through the application process to avoid or at least to minimize the potential of a contested or voided policy. Of course, one needs to find a conscientious and LifeGuide equipped broker. That is easily done by checking at the free consumer information resource: www.winquote.net There, with dozens of life insurance companies premium costs disclosed, the consumer can get an insight into the costs for the coverage, and by clicking on "Find Broker" can locate three consumer interest focused brokers nearby - listing their names and telephone numbers. Since there are thousands of LifeGuide-equipped brokers coast to coast it is quite likely that there is one or more close by.

    Banks and mortgage lenders are not permitted to demand that you buy your life insurance from or through them; the choice is yours.

    As to the idiotic "debate" of "term" versus "permanent" life insurance, it is about as valid as a debate among doctors as to whether Aspirin or Prozac is the best medication for all ailments. No self-respecting medical professional or medical journalist would entertain such a debate nor recommend either of these pills as the "cure all"!

    Rather than the near-religion dogma of "term" or "permanent", the solution needs to be formulated based on the need that is determined through proper and thorough financial needs analysis. The rule should be "Determine the need and research for the solution that would be in the best interest of the consumer" That, rather than the idiotic approach of "term is best" or "perm is best" which follows the faulty logic of "Determine the solution that best fits the seller's interests and then convince the consumer by sales persuasion (or "trickery")" For most cases, a combination of "term" for temporary and short-term needs and "permanent" for long-term needs exists. Granted, affordability comes into play, in which case it may be necessary to temporarily substitute "term" for the "permanent" needs; however, in such cases, a good broker will pay particular attention to the convertibility aspects of the "term" which is to be the temporary substitute.

    I am writing this as a consumer. I don't sell insurance; however, I do have over 4 decades of experience with the financial and life insurance sectors and I am involved on a nearly full-time basis in research on the subject of life insurance.

    Personally, I would never buy the bank-sold insurance unless I had no alternative AND I would make sure that the broker with whom I consult would be a professional who is equipped with LifeGuide and therefore is able to thoroughly research for the solution that would be in my best interest.
  • Brian | 02 Nov 2016, 11:29 AM Agree 0
    Bank insurance covers the mortgage only, probably not the best thing. A combination of term and permanent insurance is your best bet. Term will save you money, but you have to requalify at the end of the 10 yrs, and if your health has changed, you risk not getting coverage (and you're 10 yrs older, so the premiums go up). Permanent insurance offers coverage for life. Using the combination of term you can have the higher coverage for when you need it and the permanent offers a small base for later (as your kids grow up and the house is paid off, your needs are typically lower).
  • Richard Johnson | 06 Jan 2017, 01:08 PM Agree 0
    From the various posts illustrated, it is quite clear that many insurance agents must have received a 51% pass rate on their insurance exams...
  • Brad Arsenault | 09 Jan 2017, 02:30 PM Agree 0
    The level of debate on this topic troubles me. As with all topics of finance or politics there is usually a significant amount of grand-standing to make ones opinion heard over the rest. There is also a significant amount of "telling" and "voicing of personal opinion". The real question for some of the people posting is "why do you feel your planning and product knowledge is the best solution?"

    The "mortgage insurance debate" has been ongoing since I entered the insurance industry 25 years ago. Every insurance advisor knows collateral insurance at the bank is expensive for the consumer, highly profitable for the lender, and has a higher incidence of decline than insurance that is underwritten. The real questions are why haven't the lenders been informing consumers of the risks associated with purchasing this product? Is "mortgage insurance" really the worst product in the market? Does it offer any value to the consumer?

    Collateral insurance (mortgage insurance), Term insurance, Universal Life (with or without additional investment), participating Whole Life, and non-participating Whole Life each have value when used correctly. If collateral insurance is used to open up the discussion of risk and as an immediate solution until the consumer can investigate their needs further, then it can't be viewed as a bad product...the responsibility to inform consumers about "risk" is on all of us...
    - the mortgage professional at the bank (although they are not educated to know more... perhaps this moves the responsibility to the upper ranks of the banks regardless of the profitability of this product),
    - the investment advisor that believes "the markets are the only place to invest capital" (buy term and invest the difference),
    - and the insurance agents that believe cash value products are always best.

    As a professional in the financial services industry I have witnessed great wealth creation from investment in the domestic and foreign capital markets. I have also witnessed significant wealth creation and wealth transition using properly implemented insurance products. I have seen consumers that wouldn't have had any insurance if it weren't for their mortgage provider or group insurance plan.

    I love David Chilton and Suzy Orman for their personality and ability to "sell their product"...and make no mistake they are selling a product to the consumer. But are they really the most credible authors of financial research? Let's throw Kevin O'Leary in the mix...if he's as good as he thinks shouldn't we all BUY WHAT HE IS SELLING? Does an Investment Advisor really understand the value insurance can have when compared to other "guaranteed" assets? Does an insurance advisor that doesn't understand the open markets really understand the value of insurance versus investment?

    We live in a complex tax and financial world that is changing at a rate not seen in the past. One-size does NOT FIT ALL. Professionalizing our industry is better served by asking questions, engaging sound processes for financial planning, and completing our own research (not just listening to the convincing opinions of others) as each of us engages with our clients.

    The product isn't the issue it's the lack of professionalism used when engaging consumers needs.

    To the mortgage insurance sellers- keep offering it to consumers, but don't stop there. Make an introduction to an insurance professional to complete the job.

    To the buy-term and invest the difference sellers - keep offering it to consumers, but learn more about when permanent insurance might be able to improve your clients circumstance...typically it is for more affluent Canadians.

    To the sellers of whole life and permanent insurance - keep selling it, but learn about how investing in the markets can integrate with this planning. A less affluent Canadian might be better served with the proper amount of term insurance (using an analysis tool) and an RRSP, TFSA, or Investment Account.

    Lastly, I agree with some of Ami's comments but, LifeGuide is a resource tool only. It can be used as a price guide only because it doesn't take into account additional company and contract specifics. A professional insurance advisor uses price as one criteria for product selection, not the only one.

  • Yoda | 07 Jul 2017, 10:21 AM Agree 0
    An immovable parasite on the host (humanity) that's what Banks are they are the sole source of the majority suffering in the world.

    Allowing the banks to finally get into the insurance business in the 90s was a grave mistake
  • Richard | 28 Jul 2017, 10:34 AM Agree 0
    Absolute comment without any forms of context are worthless... Scott says permanent insurance worst ever. Dwaynes says permanent insurance best ever providing his personal experience of 20 years. Who is right or wrong? They are both right and wrong. If for example, you bought a Universal Life from NN about 20 years ago, based on pricing using interest rates of 8% to age 100, lapse rate of 4% and guaranteed investment acct of 4%, within the context that interest rates fell to record low for the last 20 years,as a mathematician expert in doing insurance valuation, i would say buy and keep. This is the best asset ever (please note my choice of word here using Asset and not investment). Now today, the same UL cost is 30% higher, no lapse support, minimum interest rate guarantee of 2% if you are lucky. With interest rates rising, worst asset ever from a valuation perspective...
    Same for participating whole life. Buying such policy from a Mutual versus Share capital company impacts the valuation. When an insurer demutualized, the participating funds and reserves are segregated. New participating policies will have their own pool and considering that for example for one leading insurer, the participation does not include experience on mortality... and the dividend is strictly derived from investment returns, you can't use the performance of previous participating policies to justify the sales of new ones.
    Someone said that buying a Whole life guaranteed 20 years ago was a great investment and therefore such whole life are great. I am sorry but if you bought a 20 year bond 20 years ago, considering the context of falling interest rates, yes this would have been a great investment. What is your point? The question is whether buying whole life guaranteed now is a great buy considering the probability of interest rates rising...The starting point is to calculate the IRR and then see the yield of this IRR if interest rate rise by different amounts...
    The mortgage industry has changed a lot with people getting mortgages from mortgage brokers and not from banks. The mortgage insurance offered by mortgage broker is very much different than what is sold by the banks but this is never mentioned in these analysis.
    Mortgage insurance sold by the bank is designed by insurers and not the banks. They are underwritten including post underwriting by insurers. The question is whether insurers are only offering inferior products to the banks in order to protect their own stand alone products offered through agents?
    For those who believe that selling a mix of term insurance and permanent insurance well let's look at the context. The average Canadian has 140000 of insurance and are under insured. The insurance income gap is increasing around the world and is starting to be recognized as an economic risk by governments around the world. So prior selling permanent insurance, why about selling the right amount of term and increase the average TERM insurance that Canadians have.
    Also, considering that most Canadians are in a retirement shortfall and won't have enough to retire, selling permanent insurance for estate planning purpose is like putting the cart before the horses...
    And finally I would state that for all insurance agents who state "to not buy mortgage of insurance" you are in violation of your code of ethics if you have one. This statement is highly unprofessional. You should never put a client in a position where is not insured. Your statement should be " if you are offered mortgage insurance and you have no insurance, you should definitively take it to protect your family. After it is taken, you should contact me and as an advisor I will review what you purchased, conduct a proper needs analysis, research the market for a better product in term of value and price and if a better option exists, we will apply and only after the application has been accepted and you have taken a new policy, that we will cancel the existing coverage." This is how professionals act!!!

  • Ami Maishlish | 04 Aug 2017, 09:49 PM Agree 0
    In reference to Brad Arsenault's inaccurate comment regarding LifeGuide: Regretfully he is woefully mistaken and may be either uninformed or confused with something else.

    In contrast to Brad Arsenault's erroneous remark, LifeGuide goes far beyond price! It does, of course, take into account additional company specifics, contract specifics, and more. Among other extensive detail and information, LifeGuide includes detailed insurance company profiles, filtering and research by contractual provisions, specimen policy contract wordings, etc. Moreover, LifeGuide provides detailed and comprehensive analysis and comparison over time, including accounting for the time value of money, Internal Rate of Return (IRR) analysis and comparisons, etc. Naturally, being Canada's leading and most advanced independent multiple company professional research software for solution alternatives, LifeGuide also includes comprehensive and detailed professional insurance and retirement funding analysis, mortgage and debt analysis, a host of financial calculation and projection tools etc. LifeGuide is used on a regular basis by thousands of Canada's leading insurance and financial advisors who are focused on serving the best interests of their clients, as well as by the head offices of the various insurance companies, by actuarial firms and other professionals. Of course, effective use of LifeGuide does require professional knowledge of financial matters and life insurance. It, therefore, may overwhelm agents who have yet to acquire the necessary professional financial and life insurance knowledge or those who pitch insurance at the public by price alone.

    I agree with Brad Arsenault's statement, noting that a professional advisor uses price as just one of many criteria for product evaluation and selection and that other criteria including policy contract wordings, time-value considerations, etc. deserve professional attention. Having all these capabilities and facilities in LifeGuide - far beyond just the price - is the primary reason why professional advisors pay for and use LifeGuide and why it's best to consult with an advisor who is equipped with LifeGuide. Otherwise, there is a real and likely possibility that the life insurance or critical illness insurance or long term care insurance buyer may not receive the best qualitative and quantitative value available for the premium dollar.
  • Larrie Davis | 17 Sep 2017, 11:24 AM Agree 0
    Edwin Chung, you write like a true whole life agent, you won't likely change due to your addiction to big commission cheques. Please listen to SUZE ORMAN and DAVE RAMSEY. If you can live with it, I just hope your VICTIMS forgive you.
  • Darrel Pendry | 26 Oct 2017, 03:32 PM Agree 0
    I definitely agree with the need for Life Insurance for mortgages and that you should get through a licensed insurance broker. As to what type a person needs will be completely up to the persons situation and long term goals and cash flow. To say they need only term insurance or only need permanent insurance, is completely absurd without meeting with a potential client and find out more about there situation. As far as creditor type insurance that is typically underwritten at death and the beneficiary is the bank is definitely not the best solution for anyone. Make sure you speak with a licensed insurance broker that has multiple options and make sure they are taking into account your personal goals. Learn the advantages and disadvantages of each type so you can make an educated decision.

    Darrel Pendry
Post a reply