Rob Carrick, of the Globe and Mail, has labelled mortgage life insurance “a junk product.”
Mortgage life insurance was in the news this summer after Stoney Creek resident, Christopher Massa’s death. Massa’s mortgage and mortgage life insurance was with Scotiabank when he was diagnosed with lung cancer. After his death, the bank denied the claim on his $289,000 mortgage “because he was not eligible for insurance coverage based on his health condition.”
“Banks are hyperaggressive in selling this junk product, and some mortgage brokers are getting into the act,” Carrick writes.
Carrick thinks the situation the Massa family faced can be avoided. “Buying insurance to pay off your mortgage if you die is a great thing to do for your family. Just buy it from an insurance company with competitive rates on term life policies. The coverage will most likely be cheaper than a bank-sold policy, and you pick the beneficiary. If you buy coverage from a bank, it gets the money should you die unexpectedly and your family has no say in how it’s used.”
One of the country’s leading financial journalists is saying what many advisors have long believed about mortgage life insurance.