Term life insurance vs. traditional mortgage insurance

If you’re like most people, your home may be your biggest investment. So, it makes sense to protect it with insurance that will pay off your mortgage if you or your partner were to pass away. Two common choices are traditional bank mortgage insurance and term life insurance.

Take a few moments now to learn some of the differences between term life and traditional mortgage insurance. Find out how the CPA Select* Term Life Insurance Plan may be a flexible and affordable alternative for you as a member.
 

• Beneficiary
  With traditional mortgage insurance, the mortgage lender is the sole beneficiary. So, while your loved ones are relieved of the burden of your mortgage if you pass, it’s the lender who gets the payout. You have no control over how the benefit can be spent.
  
  With term life insurance like the CPA Select Term Life Plan, you choose the beneficiary. If something were to happen to you, it would be your beneficiary to decide how the full benefit amount Is used. Whether it's to pay off the mortgage, outstanding debts, helping to pay the cost of a child’s education, assisting aging parents, or to help your surviving spouse live more comfortably after you’re gone.
  
  
• Medical tests
  Mortgage insurance usually doesn’t require a medical exam, but your claim could be denied if you have health issues.
  
  In contrast, term life insurance (CPA Select included) usually requires a medical questionnaire and exam when you apply and before you make any claims. This means you can be far more confident that the insurance provider will pay your claim.
  
  
• Portability
  Your traditional mortgage insurance is tied directly to your home and mortgage. It can only be used for that single purpose. If you sell your home, pay off your mortgage or change lenders, your coverage ends.
  
  Your CPA Select^* Term Life coverage is portable. It stays with you as long as you remain a member, no matter where your career takes you, where you decide to live, or if you pay off your mortgage or change your mortgage lender.
  
  
• Coverage
  With CPA Select Term Life Insurance, your benefit (the amount your beneficiary receives) doesn’t change. If something were to happen to you, your beneficiary would receive the full benefit amount you applied for, to use however they see fit.
  
  Not so with traditional mortgage insurance – your coverage decreases over time as your mortgage balance gets smaller, even though you continue to pay the same premiums. 
  
  
• Cost
  Over the course of a 20-year mortgage, the cost of mortgage insurance vs. term life insurance can be very different. Specifically, you usually have access to the most competitive rates on term life insurance when you are applying when you are younger and in good health. This makes term life insurance an attractive choice for financial reasons.
  
  Given that CPA Select^* Term Life coverage is available to you at exclusive members-only rates – plus the potential you have to save even more with volume savings and preferred rates (up to 27%) – this term life coverage could save you money.
   

The appeal of traditional mortgage insurance for many is the convenience plus no medical exams when you are applying. But the drawbacks are lack of flexibility, rate increases and no choice of beneficiary, among other things. It's hard to beat the flexibility of term life insurance plans like CPA Select Term Life Insurance, with a choice of beneficiary who can use the benefit as they wish, along with competitive members-only rates.

Whether you choose term life insurance or mortgage insurance to protect your home and your family, knowing the pros and cons of each can help you make the right choice.

So, if you're thinking about purchasing a home, think ahead and learn more about the advantages of utilizing your exclusive member benefits and CPA Select^* Term Life Insurance.

This article was brought to you by Manulife. As a CPA Ontario member you have exclusive access to the affordable CPA Select Insurance Plans sponsored by the Chartered Professional Accountants of Ontario and underwritten by The Manufacturers Life Insurance Company of Canada (Manulife).

* CPA Select* and CPA Select*Plans are official marks of the Chartered Professional Accountants of Ontario.