Mortgage Insurance Ottawa

Getting a mortgage is bad enough – what with terms like fixed rate, discount, variable etc – so mention mortgage insurance and naturally your eyes will start to glaze over.

However, mortgage insurance is an extremely important insurance to have – in fact, it can the difference between keeping a roof over your head or ending up having your home repossessed.

If you recently took out a mortgage, you may remember the lender asking you whether you wanted mortgage payment protection insurance. It probably sounded expensive and unnecessary. And while, in some cases, there are companies who like to charge you too much for the product, it doesn’t have to be that way.

As for it being unnecessary – get the right policy and at the right price and it will be an invaluable safety net for you. So, what is mortgage insurance? It is a product whereby should you be unable to meet your mortgage repayments due to being made involuntarily redundant or due to being able to work because of sickness or maybe an accident – then it will cover your mortgage repayments.

Your mortgage repayments (and sometimes other mortgage related outgoings too) will be covered for up to a set period of time (typically 12 months but this can vary from provider to provider) to give you enough time to find another job, or get well etc.

Many people may think that mortgage payment protection insurance is a waste of money, using the old adage “It’ll never happen to me”. However, this is not true. Being unable to work – and therefore having to struggle on state benefits – due to involuntary redundancy, accident or sickness can happen to anyone. It does not discriminate and can strike anyone at any time.

Therefore, if you are in full time employment for more than 16 hours a week and you have a mortgage, then taking out insurance against the financial ramifications makes sound sense.

Despite what the press says, it doesn’t have to be expensive to take out this kind of insurance, and nor do you have to take out a policy with your current mortgage lender. This means you are free to shop around to get a policy that offers you comprehensive protection without a high price tag!

If you are looking for mortgage protection insurance, then do not automatically accept the first quotation you get – premiums can vary wildly, as can the terms of the policy and the benefits.

Do your research – the internet is a quick and easy way to compare policies – and then make a decision from there.

What subject do people really hate to talk about? Accounting? Taxes? No, that would be life insurance. The topic of buying something that you hope will not use soon, can really stress some people.

Recent polls suggest most people are under insured or over insured. If that is the case, how do you make sure you have what is right for you? How do you make sure that you have the life insurance coverage you need?

How Much Life Insurance Is Enough?

There are online calculators that calculate information on your situation and give you a number in dollars. The general rule of thumb is 10 times your annual salary, but often this is wildly off the amount you need. As there are any number of calculators online, you can find answers to your questions by looking at them to see your situation from different points of view.

How Much Life Insurance Is Too Little?

This again depends on your assets and how much you have saved. Most people are also lacking in disability insurance. Both of these life insurance needs should really be taken together because they go in tandem. If you are well life insured but become disabled in an accident, that will not help your family.

How Much Life Insurance Is Too Much

If you have life insurance to the point where, if the capital is invested, it will pay annual interest way beyond the amount necessary to care for a family or loved one or to provide a pension.

How Much Life Insurance Is Just Right?

You should carry enough so that if invested conservatively, it will generate enough after-tax income to care for your family, whichever way the proceeds need to be used. Thats why this product is called life insurance.

The Right Amount Of Life insurance

The amount of life insurance you should carry is a very personal matter. All families differ in their needs. And not everyone believes their heirs should inherit wealth beyond the bare necessities. Some people have the attitude that as they did not receive any more than the basics, why should their heirs be any different.

Whatever your attitude, one thing that will help your family, however small, is a life insurance policy.

You don’t want to leave your family unprepared for what will happen to them financially if you do not get sufficient life insurance coverage. So planning today can provide the income your family will need if you are no longer here. Following are some reasons to consider life insurance from a company that will be there for your family. Every person and every family have their own reasons for life insurance, but the need for protection is at the base of all the needs.

Life Insurance To Replace Lost Income

People buy life insurance to replace income lost if something happens to them. It provides the capital which provides the income. Providing money for your family through life insurance is the most cost effective way even if you have substantial capital. You are buying protection for your family for pennies on the dollar.

Life Insurance Can Pay Off Debt

Debts can be difficult to pay , especially without a regular income. Life insurance capital can be used to provide income to pay off debts at the death of a loved one. If you die, the last thing you want is for your relatives to be hounded by debt collectors.

Life Insurance Pays Final Expenses

Final expenses can be large especially if there has been a long illness, along with legal, medical and funeral costs to pay. There is no real way to assess how much money will be needed but you should always plan on the maximum instead of the minimum.

Life Insurance Helps Pay For Education

Educating children is expensive and needs to be well thought out. Many people contribute funds each year but if something unexpectedly happens there may not be enough time to build up a bank for education. Life insurance helps create a cash fund that you can count on.

Finally remember that no widow or widower has ever been left too much capital through life insurance!

And Finally Life Insurance Can Provide A Pension

If you have a joint to die life insurance policy, the proceeds from such a policy or a single life policy could provide an income as a pension.

Suppose you had a joint first to die policy with your spouse. Your children grow up and leave and you are left wondering what to do with this large life insurance policy you bought to protect them. As neither of you died and the need for it has passed, you now have to make a decision.

But while thinking about this, your spouse dies and so you inherit the lump sum. It now provides you with an extra income from capital which can now be passed down the line at your death.

Considered wisely, there are not too many products as versatile as life insurance.

Immortality is no big deal. Just imagine getting up on a Monday morning 52 times a year for the rest of eternity. Really only two advantages of eternal life spring to mind – you could start reading ‘War & Peace’ and know that you would have time to finish it, and you wouldn’t need life insurance. However, as mere mortals, maybe we shouldn’t start on a very long book and we should take out life insurance, because we none of us know just how long we have got.

Not particularly cheerful advice, but very practical. Can you really face the idea of departing this life and leaving behind little more than the memory of you? If you have family or other dependants, it is vital that you provide for their futures especially if you are the main breadwinner. The trauma of the loss would be quite enough for anyone to cope with, without having to worry about how they are going to manage financially, and maybe even contemplate the loss of their home.

So if you haven’t got adequate life cover or perhaps have no life insurance of any sort, you should take action to correct that situation without delay. Perhaps you have considered it and perhaps you have even had a look at what is available, and then put off doing anything about it because there are too many options and it is difficult to know which to opt for. This is absolutely understandable because there are so many variations that anyone could be forgiven for being confused – but procrastination will not put food on the table for your dependents when you are gone.

So you need information. The following is a general guide to what is available, which should enable you to decide more or less which types of cover may be best suited to your needs. The fine detail is avoided because that is best left to the experts, whom you should be able to approach with a rough idea of what you are looking for, and equally important, which types would not be suited to your needs.

Term insurance in one of its forms is likely to meet most needs. Its name indicates that it provides cover for a period which is agreed between the company providing the policy and the insured individual. At the end of that term all cover ceases and there is no cash value remaining. Payment against the policy will usually be in the form of a lump sum on the death of the insured.

There are a variety of different forms of cover available under the umbrella name of term insurance, of which the following are the more usual examples.

Family Income Benefit is one of the best and must have been developed with bereaved families in mind. The death of the policy holder during the term of the insurance releases a tax free sum which will be paid every year right through to the end of the term. Costs for this type are at a minimum because the term during which the payments would be made is constantly reducing.

Level term insurance is very straight forward. It is well suited to covering the capital portion of an ‘interest only’ mortgage, because the value of cover is determined at the outset and is retained for the whole of the term.

A Decreasing Term policy on the other hand is better suited to covering a repayment mortgage, as it decreases in value over the term to nil at the end, effectively shadowing the reducing balance of the mortgage. The premiums are correspondingly low.

An Increasing Term mortgage maintains its value throughout the term by taking the effects of inflation into account, and is best suited to fulfilling a lump sum requirement at a constant value. The premiums are correspondingly high.

Finally it is worthwhile mentioning Whole of Life cover which is not actually term insurance, as the cover provided is effective to the end of the life of the insured person, subject only to the premiums being paid as due. The insured amount, plus the value of any benefits accruing to the investment, is paid out on the death of the insured

The above few examples give a generalised guide to some of the policies which are available, and should allow you to talk to a broker and discuss your needs in detail. It may well be that more than one type of cover will be required to meet all your needs, but find a brokers via the internet (which is an excellent source), and they will provide guidance.

Once settled you can relax, content that you have taken care of your dependents needs, and if you are really adventurous you could start reading ‘War and Peace’!