by Glenn Cooke
Lets cut right to the chase – here’s a table of current monthly premiums for bank mortgage insurance, $500,000 Male Nonsmoker standard health, Ontario vs. 20 year term life insurance:
|Age||Term||The Term Guy||TD||RBC||BMO||ScotiaBank||CIBC|
You can see from the above table that bank mortgage life insurance is substantially more expensive than competitively priced 20 year term life insurance – and 10 year term life insurance is even less expensive than that (often about half the premium of 20 year term, particularly at ages 45 and above).
Why so expensive? There’s a few reasons. First, nobody shops around for bank mortgage life insurance premiums. We get presented with a premium as a final solution when we sign or mortgage documents, and the idea of shopping for competitive premiums simply isn’t discussed – ever. So banks can get away with charging whatever premiums they like.
Bank mortgage life insurance premiums are also the same for everybody – so men pay the same premiums as women. And non-smokers pay the same price as smokers. So bank mortgage life insurance is priced to account for the worst possible scenario in terms of age/sex/smoking status whereas term life insurance has these factors split out and discounted where appropriate.
And that means if you’re insuring your mortgage using bank mortgage life insurance that you should switch to term life insurance immediately – don’t pay those inflated premiums to the bank any longer than necessary.
You can run your own life insurance quotes comparing term life insurance to the banks mortgage life insurance premiums here.
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