6 questions to ask your mortgage insurance broker
Buying mortgage insurance helps protect the household financially in the event of serious illness, disability or death. In these unexpected situations, insurance takes over the payment of mortgage payments.
But before rushing to sign up for insurance offered by the lender, it's best to consult a mortgage insurance broker and ask them the right questions to determine the most suitable coverage.
Is my insurability verified before signing the contract or during a claim?
Many insurers only check the insurability of the insured at the time of a claim. It is only when paying compensation that they analyze the risks and sometimes refuse to pay, content to reimburse the premiums. Insurance policies offered by brokers generally study the insurability of the client before signing the contract, which helps to avoid unpleasant surprises during a claim.
Are my premiums fixed or will they change?
There are policies with a periodic premium review clause. This means that it is steadily increasing according to complex indices that no one has mastered. Other insurances, on the other hand, establish fixed premiums throughout the contract, even if the insured's health deteriorates.
Am I the owner of my insurance?
Some mortgage insurance policies, especially those sold by banks, only cover mortgage payments, even if the loan is mostly paid off. Also, they pay the mortgage directly into the hands of the lending institution. In the event of death, the insured's family has to face numerous expenses. This is why the contracts offered by brokers are better suited in this type of situation: they designate a beneficiary who is free to use the insurance product as he sees fit. It can be used to pay off a personal loan, a line of credit, or even pay the children's education costs.
Does the insurance still cover me if I change my lender?
When you take out a mortgage, you can also take out mortgage insurance offered by the lending institution, or take out an insurance policy with a broker. In the first case, the insurance contract is linked to the loan. So, when renewing the mortgage, if you change banks for a better rate, the insurance contract ends and the borrower must take out new insurance. But with the passing years, the risk is greater, the premium is more expensive, and it can be difficult to find insurance if the insured has encountered health problems. Good mortgage insurance should allow you to change lenders while keeping the same policy and the same premium. This is the case for contracts offered by brokers.
Is my insurance transferable to another property?
A mortgage loan insurance contract with a broker follows the insured when they change banks. It is transferable to a new asset, if the insured buys a house or an apartment. Since the contract is not new but is simply transferred, this means no questionnaire, no medical examinations, and no risk of being denied insurance.
Is it possible to convert the insurance to another product?
In the event of early repayment of the loan, only insurance policies taken out with a broker can include a conversion clause into life insurance. The contracts offered by the banks do not offer it.
Not all mortgage insurance policies are created equal. Some trap policyholders, while others protect them while following them when they change banks or buy back property. Are you about to purchase mortgage insurance? Now you know what questions to ask your broker.
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