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Self Owned vs. Bank Owned Mortgage Insurance

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Before buying insurance from your bank to cover your mortgage, understand the difference between self owned mortgage life insurance and bank owned life insurance. The key differences are ownership, premium, coverage, beneficiaries and portability.

Ownership:

  • Self: You own and control the policy.

  • Bank: The bank owns and controls the policy.

Premium:

  • Self: Your premiums are guaranteed at policy issue and discounts are available based on your health.

  • Bank: Premiums are not guaranteed and there are no discounts available based on your health.

Coverage:

  • Self: The coverage that you apply for remains the same.

  • Bank: The coverage is tied to your mortgage balance therefore it decreases as you pay down your mortgage but the premium stays the same.

Beneficiary:

  • Self: You choose who your beneficiary is and they can choose how they want to use the insurance benefit.

  • Bank: The bank is beneficiary and only pays off your mortgage.

Portability:

  • Self: Your policy stays with you regardless of your lender.

  • Bank: Your policy is tied to your lender and if you change, you may need to reapply for insurance.

We’ve created an infographic about the difference between personally owned life insurance vs. bank owned life insurance.

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The Best Way to Buy Mortgage Insurance

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Before buying insurance from your bank to cover your mortgage, please consider your options. What does the insurance cover?

  • From the bank: only the balance of your mortgage

  • From us: whatever you need it to cover such as debts, line of credit

What happens as my mortgage balance decreases?

  • From the bank: the coverage amount decreases as your balance decreases.

  • From us: the coverage stays the same for as long as you own your policy

What if I switch banks?

  • From the bank: You might lose your coverage and need to reapply

  • From us: Your coverage stays the same, since it’s not tied to your mortgage

Who gets the benefit if I die?

  • From the bank: The Bank

  • From us: You decide who gets the insurance and how to use it, such as to pay your mortgage, medical expenses or child’s education- whatever is best for your family

Talk to us, we can help.

Why You Should Consider Critical Illness Insurance

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There are no perfect answers in the area of your personal finances, but if you are looking for an option that has the potential to offer you a real sense of peace of mind to secure the financial future of you and your family, critical illness insurance is certainly an interesting avenue to explore.

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