CBC Marketplace investigates mortgage insurance, Post claim underwriting for mortgage insurance

CBC Marketplace “In Denial” – Mortgage Insurance

CBC Marketplace takes a deep dive into mortgage insurance with the investigative report “In Denial”.

They take a look at what really goes on when someone decides to purchase mortgage insurance from a major Canadian bank.

CBC Marketplace poses an important question everyone should ask about mortgage insurance: how much are you really covered?

As I talked about in my latest Street Smarts video, mortgage insurance pays off your mortgage should you become sick or pass away.

That way, insurance payouts will go to you or your loved ones instead of going to the lender.

Medical questions and monthly premiums

CBC talked to two households who purchased insurance, which cost them somewhere between $20-45 a month. They showed the easy sign-up process. When they took out or renewed their mortgage, they answered a few simple “yes or no” medical questions and started paying monthly premiums.

However, when one woman’s husband suddenly died of a heart attack, and the other woman’s husband became sick with cancer, the insurance company denied their claim.

Why? How?

Post-claim underwriting

It’s all a part of a process called post-claim underwriting.

In some states in the U.S., it’s illegal. In Alberta, they made it mandatory to become licensed before you can sell mortgage insurance.

Post-claim underwriting is when they examine your medical records only after you file your claim.

Many people think they’re covered

This means the bank is collecting premiums from people who don’t even qualify – but because the questions on the medical questionnaire are confusing, it leaves many people thinking they’re covered when they really aren’t.

Jim Bullock, who has been in the insurance industry for 35 years and fights for families to get paid out for their mortgage insurance, says the questions are made to trip you up. “[There is] virtually no chance of doing it accurately. I haven’t seen anybody do it,” he says.

What should you take away from this program?

That buying mortgage insurance is very easy, but understanding if you’re actually covered is fairly difficult. Take your time filling out the medical questionnaire and ask questions if you have them. Make sure that when it comes time to file a claim, you have properly understood what is – and isn’t – covered.

To see a shortened version of the episode, watch below:

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Make sure and let us know in the comments below if you learned something new. I’d also love to answer any questions about mortgage insurance or about any of my other blog topics!

Download our handy chart to see the differences between bank mortgage insurance and self owned mortgage insurance. Bank vs Personal Mortgage Life Insurance.

mortgage insurance

Let’s Talk Mortgage Insurance

Today I want to talk about the importance of mortgage insurance and why you should be discussing it with your financial advisor. Even if you don’t yet have a mortgage, it’s important to know for when you do start looking, or to inform your loved ones of what can happen if your mortgage isn’t insured.

What is mortgage insurance?

Mortgage insurance is the bank’s version of life and disability insurance. If a person becomes sick, injured, or passes away, the insurance will pay the mortgage to the lender on behalf of the individual.

Why is it important to have?

If you pass away, do you want your insurance to pay loved ones or have that money taken away to pay off lenders? Mortgage insurance ensures that mortgages are paid so that loved ones can still receive those financial benefits.

It’s also important because the insurance isn’t portable. This means that if you decide to renew your mortgage with another lender, you now have to prequalify for your insurance with that new lender. If your health has declined since then, that could be a huge problem.

In most cases, you’re actually paying a higher premium with less benefits. I highly suggest watching “In Denial” from CBC Marketplace. The story goes into detail about mortgage insurance and some important things to look out for.  If you have a mortgage or are looking to get one, it’s a must-watch.

Bottom line: talk to your financial advisor about mortgage insurance. Make sure you’re doing a needs analysis to make sure you’re seeing the big picture. Be informed and stay educated when it comes to mortgage insurance. It can make a difference between having nothing and having everything – make sure you’re covered when it comes to paying out lenders.

Scroll to the bottom and let us know in the comments below if you want to know more about mortgage insurance or if you have any feedback on our new show.

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