Mortgage Life Insurance’s Perfect Storm

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You may not actually have full coverage when you buy mortgage life insurance from your bank.

Wait… What? 

  1. There bank clerks who offer you mortgage life insurance are usually not licensed to give you insurance advice. The only advice you receive is in the form of a brochure.
  2. You are not offered much time to consider and evaluate the offer.
  3. The application form is usually no more than one page.

It’s the third point that could potentially pull the rug from under your family.

Beware the One Page Mortgage Life Insurance Application!

The bank’s application includes a short summary question relating to your health. This question attempts to  cover a range of typical health concerns. However, it does not come close to the disclosure required to  underwrite a proper life insurance policy.

It might take you more time to apply for an individual life insurance policy. You must answer medical questions and other disclosures relating to your lifestyle, family history of disease, etc. A nurse will probably also need to take your blood pressure, vitals and perhaps a blood and urine sample. Your doctor may need to send in a medical report about your health. All this evidence is then carefully evaluated by an underwriter before they even issue a policy.

This sounds like more work but rest assured. All of this is done up-front so that your coverage is rock solid. There should be no unresolved questions if you die. The bottom line is that your family simply needs to receive a cheque so they can go on living.

The qualification questions on the bank-issued mortgage life insurance application are very short. They will do their underwriting after you die and your family will be subjected to that aggravation. As a result, there is a higher possibly that the claim may be denied.  All they need is a loophole through the potential gaps in that very short application!

This could have tragic consequences!

Banks Don’t Like Complications

Bank-issued mortgage life insurance is issued on a simple accept/decline basis. Consequently, you may be left without coverage if they decide you are not worthy. A qualified broker will very often be able to get you coverage even if you don’t quite fit into the bank’s insurance “box.”

We covered all of this in a post titled “7 Things the Banks Don’t Tell You About Mortgage Life Insurance.” You can also receive our special report. It takes a deeper dive into this issue that could dramatically affect your family’s future should tragedy strike.

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