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5 Reasons why first-time home buyers should consider term life insurance over mortgage insurance

Helpful Tips, Insurance

Posted by Empire Life

Nov 17, 2017 3:23:36 PM

Buying your first home? When your mortgage application is approved, your lender will likely ask if you want to purchase mortgage insurance. Before you say yes, remember you have other options for protecting your family and ensuring your mortgage is paid off, should you die unexpectedly. For many, including millennials, purchasing term life insurance may prove to be the more financially savvy choice. Contact a life insurance advisor before you close the deal to find out which option is best for you. 

Term life insurance is a type of life insurance coverage that provides protection for a specific number of years--typically, in 10- or 20-year terms. When you purchase an individual term life insurance policy at a young age, your premiums can be quite low, sometimes even lower than a monthly mortgage insurance rate which can cost almost double the initial cost of term life insurance.1Mortgage insurance can only be used to pay off the mortgage and the cost remains the same even though the amount of the mortgage decreases as payments are made. With individual life insurance, the amount stays the same and can be used as required at the time of death.  

Purchasing term life insurance from Empire Life can be simple, fast, easy and may save you money! 

A life insurance advisor will help you determine how much life insurance you need to protect your new investment so that if the unexpected happens, your loved ones are also protected.

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1 $250,000 of Empire Life Solution 20 term life insurance coverage on a healthy 30-year-old, non-smoking female costs $16.43/mo for the initial 20 year term (Premiums increase at each renewal) compared to the average cost of $250,000 of mortgage life insurance coverage from RBC, Scotiabank, TD Canada Trust, BMO and CIBC  on the same individual, which is $27.88. These rates are as of January 2017. At the end of each 20 year term, Empire Life Solution 20 automatically renews and the premiums increase. If the amortization period of the mortgage is greater than 20 years, a renewal at a higher premium rate will be required to continue your Solution 20 coverage beyond the first 20 years.  Premiums for mortgage life insurance stay the same, but the amount of coverage decreases as your mortgage decreases.

2 RBC, Scotiabank, TD Canada Trust, BMO and CIBC.

3 Subject to the terms of the contract.

The information in this document is for general information purposes only and is not intended to provide legal, tax, financial or professional advice. The Empire Life Insurance Company assumes no responsibility for any reliance made on or misuse or

omissions of the information contained in this document.  Please seek professional advice before making any decision.

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