For many of us, purchasing a home can be one of our biggest life decisions. Often that purchase involves a substantial mortgage and years of debt. Slowly paying down the mortgage creates for many their biggest family asset base. It is why many home owners make the decision to add mortgage insurance to cover remainder mortgage debt owing in the case of death of one of the owners.
Taking proactive steps to care for surviving family members is responsible, caring and commendable. Because life is busy, many home owners choose to simply add the mortgage insurance offered by the lending institution. We believe there is a superior alternative that puts you and your family first.
Term insurance is often a better overall solution for you and your family. In this article, we will compare similarities while also contrasting mortgage insurance vs. term insurance.
Ready to get a complimentary quote to see if our insurance package fits your needs better than your current mortgage insurance coverage? Take a minute to get in touch with us at 1-800-661-5196 ext: 4, email your dedicated account manager or send a general email to email@example.com.
To help illustrate, let’s consider a case study of a family. A married couple, the Smiths, with two children purchase a $1,000,000 home and carry a $500,000 mortgage with a 20-year term. The couple obtains a mortgage at the bank and is offered mortgage insurance that can be blended into their monthly mortgage payment. Before agreeing, they sit with their personal insurance specialist at Bryson to get a quote for term insurance. Premiums come back equal but the couple chooses the term insurance over the mortgage insurance.
Why did they choose individual term insurance to cover the mortgage?
Surprisingly, ease of insurance is actually easier with mortgage insurance. The bank asks a few standard health questions but holds off on doing a medical check until after a claim is made. What does this mean? After death, the mortgage insurance company often conducts an analysis of medical records to determine insurability. And what does that mean? It is possible for the mortgage insurance company to reject payment and instead only return premiums paid in over the life of the policy.
CBC Marketwatch investigated Lender Mortgage Insurance in a segment called “In Denial”
How was obtaining term insurance different? Well, the Smiths were asked health questions from their personal insurance specialist and were required to complete a medical exam before the insurance policy was issued. When approved and delivered, the Smiths could rest with peace of mind knowing they are properly insured.
What else did the Smith family love about their own term policy? Just that, they own the policy and are able to select their own beneficiaries. This is different from lender mortgage insurance which names the lender as the beneficiary. With term insurance the Smiths are in control of their future and are able to name each other as beneficiary (instead of the lending institution).
Why is this important? The surviving spouse can make powerful decisions with the payment received. Maybe paying off the mortgage is the best option but maybe it makes sense to pay down other higher interest debts that are accumulated or other supports the family requires in its time of need.
While these are significant differences, the biggest is getting what you pay for. Warren Buffett’s wisdom: ‘Price is what you pay, value is what you get’ rings true in this discussion. While the premium payments may be similar, the payout can be significantly different. With lender mortgage insurance, the coverage decreases with the remaining balance of the mortgage. With term insurance the premium payment and death benefit remain what was initially agreed to.
The Smiths also knew they would likely be moving within the next few years. They knew this was an opportunity to get proper insurance while they are healthy which helped to keep premiums down and the coverage reliable regardless of who carries their mortgage.
The Bottom Line
To help you make an informed decision, we offer to complete with you an insurance health check. We will evaluate insurance coverage you have in force today and compare it with what is important to you.
Water damage is becoming more and more a problem for Canadian homeowners. Insurance companies are also altering how they manage the risk involved with certain types of water damage, specifically damages caused by overland water.
Overland water is classified as water entering a property from the sudden accumulation of water from events like heavy rains, spring run-off and overflow from lakes and winters.
Insurance companies have created an add-on option for most home owners called Overland Water Coverage to protect from this type of damage. Most policies have damage resulting from overland water damage explicitly excluded from the homeowner policy.
This coverage is important and for a few extra dollars a month can provide protection against
significant loss. A recent article in the Toronto Star tells the story of a family that was denied a $2 million water damage claim because it was judged to be from water seepage which was specifically excluded from the policy.
Stories like this highlight the importance of taking the time to talk with your insurance broker about risks your home policy may not be covering you against.
Changing climate conditions is linked to an increase in the occurrence and severity of damage caused by overland water.
Our climate is changing. The average Canadian city is experiencing 20 more days of rain then what occurred in the 1950s.
The severity is also on the rise. The Insurance Bureau of Canada notes that what used to be a 1-in-40 year storm is now more like a 1-in-6 year storm. These storms cause heavier precipitation and flash flooding that is more likely to damage homes and personal belongings.
Depending on the age of your home and the type of basement you have there are things you can do to help protect your home from damage caused by overland water.
We will go deeper into solutions in a following article but a quick overview includes maintaining or adding a sump pump, checking tree root systems, adding backflow valves and removing valuables or other expensive items from basement storage.
The first action to take is to read through your insurance policy to see exactly what is covered. For you, that may be as exciting as reading the phone book. Trust us, knowing what you are covered for is an important responsibility that comes with owning your home.
To take the guess work out and call someone who likes to read insurance policies; your local Bryson Insurance personal insurance specialist! Take a minute to get in touch with us at 1-800-661-5196 ext: 4, email your dedicated account manager or send a general email to firstname.lastname@example.org.
written by Tobi McLeod
Many of us feel trapped within the obstacles of our own lives. Each one of us will experience different struggles in our world around us. Some of us struggle with work, family, finances, and each one of us has different coping skills for the changes that come our way.
Change of seasons to some people is a difficult time. Many revere winter as a time of sadness, an ending. However, winter is actually a time of renewal. Winter is a chance for everything to slow down, rest and rejuvenate. Everything in the natural world changes in the winter: animals hibernate, trees are bare of leaves, and bodies of water freeze over.
When spring arrives in a couple of months, we will be fresh and rested, ready to take on new challenges with energy and enthusiasm. The spring is when wildlife comes alive again, birds are singing, plants and trees develop new buds and the blooms begin.
Seasonal Affective Disorder (known as SAD) is defined as late autumn and winter depression associated with the lack of natural daylight. People who suffer from Bipolar Disorder have a tendency to have extreme depression during the winter months. Some may feel hopelessness and worthlessness, have thoughts of suicide, suffer from insomnia and many will turn to alcohol or recreational drugs to help with their symptoms. The use of substances, other than a prescription that is prescribed by your physician, can be highly dangerous. If you are on medications then the interaction can be detrimental. If you are not on any medication, alcohol and recreational drugs can act as a depressant and therefore lower your mood further. It is recommended to avoid alcohol and recreational drugs during episodes of SAD or any other form of depression you may experience throughout the year.
There are two possibilities that can cause SAD; one is related to the lack of serotonin. Serotonin carries signals along the neurotransmitters from the brain to the body systems, mainly between the brain and the gastrointestinal tract. As such, many people that experience regular depression and other mood disorders will suffer from digestive disorders as well. Some researchers maintain serotonin is regarded as the chemical responsible for maintaining mood balance.
The other possibility is a lack of melatonin, the hormone that is produced by the pineal gland. A lack of melatonin can have a substantial effect on the circadian rhythms that synchronize the body systems for sleep, blood pressure and boost immune system. Circadian rhythm is the primary function to regulate our day – night cycles. As we age, the amount of melatonin we naturally produce lowers which can lead to diseases that are affected by memory such as Alzheimer’s and Dementia.
During this time of year, in the middle of winter, many people feel the challenge from the lack of sunshine and short days. For some people it may feel like there are fewer reasons to get up and get things done. This is the season of procrastination.
The lack of serotonin, melatonin or vitamin D from the lack of sunlight can have profound physical and psychological effects on your body and the body systems. These changes may include: feeling tired and sluggish, general lack of energy, weakened immune system, lack of concentration and focus, overeating and weight gain, as well as sleep issues which are normally related to the lack of melatonin being produced and released into the body.
The psychological effects can include the desire to be alone, withdrawing from social activities and general feeling of isolation.
There are many ways to combat against the symptoms of SAD. Take steps to keep your mood and motivation steady throughout the year. For mild symptoms, try spending more time outdoors, go tobogganing, skating, for a walk – the fresh air and any sunshine you can absorb (even through a cloud covered sky) will help rejuvenate and energize you. Try the following for other ways to help during this season: leave curtains open to let maximum light come inside, move your favourite chair closer to the window, install a skylight. Another option would be “Light Therapy” which involves sitting near a special fluorescent light box for several minutes each day.
Taking a supplement of Vitamin D (usually in drop format) will help against the symptoms of SAD. Other ideas are to resist the carbohydrate cravings as they are only a temporary booster to your system and you will feel the down effect faster than consuming something with natural components, such as orange juice or a protein like peanut butter or Greek yogurt.
Monitor your diet during the winter months to avoid the ‘high’ of carbohydrates and the winter weight gain. Be aware of your sleep patterns and make sure you are getting adequate sleep nightly. Sleep deprivation is one of the most disruptive to your body and brain functions.
Remember this simple equation: Less SUN = Less VITAMIN D = Less MELATONIN = Less HEALTH
Mind yourself and your mental health.
**Consult with your doctor before starting any new course of therapy or treatment.