Perils of a mortgage life policy

Insurance attached to your home loan can be a poor deal, Ellen Roseman explains

Published On Sun Apr 22 2007
Toronto Star By Ellen Roseman Personal Finance Columnist

You’re buying a house and taking out a big loan to pay for it. Now, the bank is asking whether you want life insurance.

Reluctant to leave an unpaid debt when you die, you say yes. Within minutes, your application is approved and the cost is added to your mortgage payments.

For lenders, life insurance is an easy sell. They suggest it at a time when you’re vulnerable and have yet to do any comparison shopping.

And they make you sign a waiver form if you say no, agreeing not to hold the lender responsible if something bad happens to you.

Most people don’t realize that the life insurance sold by mortgage lenders is different from the policies sold by life insurance agents and brokers.

It sounds like a great deal at the time, but mortgage life insurance can be more expensive than insurance sold separately.

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