by Glenn Cooke
Looking for BMO Mortgage Life Insurance? Know what you’re buying – we’ve read the contract and here’s what you need to know:
Ages 18-65, policy terminates at age 70.
Maximum coverage amount: $1,000,000
You may cancel the coverage at any time by calling BMO. (Note: never cancel life insurance until you have sufficient replacement life insurance in force).
• The date the mortgage is paid in full or discharged.
• If your mortgage principle increases.
• When you refinance your mortgage.
• At age 70.
• The date that the group policy terminates (note that you do not control when that policy terminates.).
This means that your coverage expires when every time your mortgage renews or if you switch mortgage providers.
This is group mortgage life insurance between BMO and Sun Life Assurance (the insurance company), so BMO bank owns the policy.
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The beneficiary of the life insurance is BMO (not your named beneficiaries or family). Any claim amount is used to pay down the mortgage – but may NOT pay off the full amount.
Underwriting is generally a series of yes/no questions. However, no underwriting (evaluation of your ability to qualify for coverage) is done when you apply. Instead, BMO uses what is known as post-claim underwriting. This means that they review your application after you die, in order to determine if you actually qualified for coverage. If they find that you did not qualify, then your claim is denied.
In addition, if you have two people insured with BMO mortgage life insurance they will pay only one claim. This means that if two spouses are insured for the same mortgage, then you’re paying for two people to be insured but only one death claim will be paid.
Maximum coverage is $600,000. If your mortgage amount when you apply exceeds $600,000 then you are not covered for any excess mortgage amount(and thus, your entire mortgage may not be paid off).
Your coverage is not level. Instead it declines along with your mortgage balance.
Premiums are level over the term of your mortgage (often 5 years, if you’ve selected a 5 year term mortgage rate).
Provincial sales tax is also added onto your premiums.
Premiums will increase with age at the time of new mortgage applications, as well as requiring a new medical application.
Link to the BMO mortgage life insurance certificate of insurance: https://www.bmo.com/pdf/Mortgage_Protection_Insurance_Certificate.pdf