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Should You Purchase Insurance through a Bank or a Broker?

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Should You Purchase Life Insurance Policy Contract through a Bank or a Broker?

Don’t Buy Mortgage Insurance From Your Bank or Lender!

Despite the perceived convenience, this can be a potentially disastrous choice for families. Here’s a comparison between purchasing life insurance from a bank and a private insurance broker.

Life Insurance Source Comparison

Bank Insurance Individual Life Insurance
At renewal, you generally need tore-qualify for your life insurance option. Should there be a negative change in your health, you may no longer be able to obtain coverage. You are underwritten at application time, and once approved, this coverage cannot be revoked, provided the premiums are paid.
It is common to consider changing lending institutions at renewal, unfortunately your life insurance coverage is not transferable to the next institution. Health issues could negate your ability to obtain coverage at a new institution. Once you have an individual policy, your coverage is not tied to your mortgage.
Typically, mortgage insurance names the lending institution as the beneficiary of the insurance rather than your significant other. Upon your demise, the mortgage is paid off, but without additional income loss protection, your significant other may have to sell the home to survive. On death, your significant other has the choice of paying off the mortgage or continuing to make the monthly payments based on the situation. The key benefits here are control and choice.
The death benefit is usually on the declining balance of the mortgage. The death benefit is either the original coverage amount, or may increase, depending on the type of policy chosen. The key benefit here is increased flexibility.
Typically, life insurance from lending institutions does not offer a discount for excellent health. For people in excellent health,discounts of up to 35% are available. Individual polices are also generally less expensive than lender insurance.
Lender insurance generally does not allow for coverage amounts in excess of the mortgage amount. An individual policy allows you to combine your mortgage and family requirements in one policy, allowing you to take advantage of lower costs per $1,000 for larger death benefits.
Premiums are not guaranteed Premiums can be guaranteed for a specific term or a lifetime.
Some lenders include disability and critical illness insurance as part of their mortgage insurance packages. Life, disability, and critical illness insurance are typically separate policies. Individual disability and critical illness policies typically offer more options, and flexibility compared to the basic coverage of lenders. Ask about three-in-one integrated plans.

There are many other reasons to choose a private policy purchased through an insurance broker rather than a bank. A trained independent broker assists in choosing the best insurance type and term period.

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All product names, trademarks, and trade names are the property of their respective owners. The Insurance Council (BC, AB, SK, MB), Financial Services Commission (ON), Chambre de la Sécurité Financière (QC), The Superintendent of Insurance (NB, NL, PE, NS) are the provincial and federal authorities that regulate, supervise and enforce standards for life insurance professionals. IDC member websites include: Life Insurance Newspaper, Employee Benefits Newspaper

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