A mortgage is a long-term financial commitment and you have to maintain the monthly repayments for the full duration of the mortgage. That’s going to be over many years but non of us have the benefit of a crystal ball - so no one knows how your circumstances are going to change. So that must represent a big risk.

Mortgage Payment Protection Insurance (MPPI) is just one of a range of valuable insurances which includes critical illness insurance and life insurance, which you can use to reduce that risk and protect your family’s finances. The purpose of MPPI is to ensure that you have the income to continue paying your mortgage repayments if you’re off work for an extended period due to accident, sickness or unemployment.

The Top Tips

Some mortgage lenders may try to coerce you into taking out an MPPI policy along with your mortgage. If this happens, make sure you find out how much extra the MPPI cover will cost you each month. Then get on the Internet and get some competitive quotations. Most people will find that the Internet saves them up to 60%!

Mortgage lenders will only quote you for the amount of cover you need to meet your monthly mortgage repayments. The author recommends that you extend the cover to include the cost of your home & contents insurance, mortgage life insurance, and the cost of any investment plan you have arranged to repay your mortgage (the investment plan only applies to mortgages where you are only paying the interest each month and will be repaying the capital at the end of the mortgage).

You can take out MPPI at any time. Some people wrongly believe that you can only take out MPPI when you arrange the mortgage.

If your employment is casual or seasonal you will not be able to claim on an MPPI policy. Every policy has what are called exclusions and seasonal and casual work is a typical exclusion. Exclusions are the circumstances under which a claim will be refused. Be sure to read these exclusions before you take out the policy and, if your circumstances mean that you’re unlikely to be able to make a valid claim, don’t buy the insurance! Exclusions on MPPI policies can eliminate 50% of potential claims.

The cheapest is not always the best. So don’t automatically opt for the cheapest policy. The circumstances under which policies pay out do vary - so check them out cautiously. The premium quoted will be a reflection of the extent of the exclusions in the policy, the level of cover provided and the insurers general pricing policy.

MPPI is sold under a number of alternative names. So don’t get confused. It can also be described as Accident Sickness and Unemployment Insurance, Payment Care and Payment Cover. In principle, they are the same - but remember to check out the exclusions!

Most MPPI policies say that you must be off work for a minimum period before you can claim. The longest period you’ll find is 60 days but many policies reduce this to 30 days. Some will then backdate the payment to the first day you were off work. Look out for the details which you’ll find in the policy’s Terms and Conditions. Always check these out before you buy - and remember to compare like with like when you’re comparing prices.

Don’t confuse Mortgage Indemnity Insurance (MIG) with Mortgage Payment Protection Insurance. MIG p rovides insurance cover for a lender for any losses they might suffer as a result of a property on which they provided a mortgage being sold for less than the value of the outstanding mortgage. All payments under a MIG policy go to the lender, not you!

If you have Permanent Health Insurance your may not need MPPI. Check out the terms of you PHI policy and then make your mind up whether MPPI is adding anything extra.

If you already have Critical Illness Insurance be aware that there is a level of duplication with MPPI. MPPI will pay an income during the insured period for any illness that prevents you from working. Critical illness Insurance pays out a lump sum if you have any of the chronic illnesses listed on the critical illness policy (other conditions apply). So if you have a valid claim under your critical illness policy, you will probably also have a valid claim under your MPPI policy. However, if the illness that’s keeping you off work is not listed on the chronic list then only your MPPI policy will payout.

Do shop around. You’ll find that the Internet is the cheapest place to shop for MPPI and many web sites enable you to arrange cover immediately online.

The good bit - if you claim, the income is totally tax-free!

Michael is the chief editor of Express Life Insurance offer life insurance and mortgage life insurance.

Additional reading - What is Mortgage Payment Protection Insurance?

Share This

Mortgage insurance, to pay off a mortgage, is something you’ll inevitably be asked to take out by the bank. Mortgage insurance is necessary so that if something happens to you or your spouse then your loan will be paid off which is good news for your family and the bank. Banks act as if doing you a favour by offering mortgage insurance through their own group plan. Are they?

Mortgage Insurance Is Probably A Much Better Deal From Any Number Of Insurance Companies.

Mortgage insurance is no different than term life insurance; in fact it is term life insurance. With either, your policy lasts for a specified period of time and pays if something happens to you or your spouse if you are both insured. The real difference is how much control you’ll have over your policy and how much you’ll pay for it.

Mortgage insurance offered by the bank, does not allow you to customize a policy to fit your needs and you’ll be lumped together with other borrowers under a group plan. So, you will have no control over your policy. For example, through a company of your choice, such as Canada Life or National Life, you would be able to choose your own beneficiary and decide how to spend the proceeds. These options are not available with a mortgage taken from a lending institution. If the insured party dies, the mortgage loan is completely paid off, even if you need some money for other things.

Additionally, the bank has the right to not renew your policy and to cancel the policy when you sell the house. Do you want to give up this control as now you may have become uninsurable?

MORTGAGE INSURANCE COSTS MORE FROM A BANK

Your own premiums will not go up in the life of a 20 year policy so you would pay the same premium today that you’d pay ten years from now. You won’t get that same guarantee from a bank which can increase your premiums during the life of the policy. In addition, you could pay as much as 40% more right now than if you shopped around and found your own insurance provider. Not to mention that the policy you take out through your bank will gradually decrease in face value while a plan you select from an outside source will have the same face value during the entire policy period.

Of course, many people don’t mind paying more for their mortgage insurance because it’s more convenient than dealing with insurance agents. But the truth is that you can easily find a policy that fits your needs and provides affordable premiums via the Internet. An organization, such as The Hughes Trustco Group, can generate quotes for you from all the providers so you’ll know that you’re receiving the best deal possible on the policy you want.

Mortgage insurance is important and should be part of your home buying or refinancing preparations, but that does not mean you need to pay more or let the bank make important decisions for you. Instead, you should find your own personal plan at a company that you choose which will let you stay in control of your policy and will save you money in the long run. You can get a quote right here at Mortgage Insurance.

Ivon T. Hughes, The Hughes Trustco Group Ltd.
Online Insurance Broker - Get a FREE Quote TODAY!
Tel: (514) 842-9001
Email: info@trustco.ca
Web: http://www.hughestrustco.com

Share This

Perhaps the most important process of buying or selling your home is the “contract of purchase and sale”. This one contract must be the strongest link in the chain that holds your purchase or sale together. The intent of each item included in this contract must be clear with no misunderstandings. In other words, everyone understand what to do and when to do it.

The “contract of purchase and sale” has been developed by the B.C. Real Estate Association and the Canadian Bar Association within British Columbia. This contract is mostly suitable for residential real estate and should not be used for commercial transactions. One major issue in the contract of purchase and sale that is often over looked is the numbering of pages. The approved contract and all ammendum pages should be cross referenced. The appropriate page number should be written at the top of each page (i.e., Page 1 of 3, or Page 2 of 3 and so forth).

An amendment to an original contract of purchase and sale is essentially known as a change in the agreement. This new agreement that has been made should be put in writing in what as known as an “addendum form” and signed by all the parties to the contract. Each of these parties much receive a copy and this copy must be dated appropriately. The amendment done on the addendum form must clearly refer to the original contract and “all other terms and conditions remain the same” should be in writing after the change.

Are you out of the country or out of the province? The seller or buyer may appoint someone (realtor or another person) to act on his or her behalf with regards to any real estate transaction. This authorization should explain the exact terms and conditions under what authority the person has to sign on an agreement. For example: A telegram, letter or fax may be perfectly fine for this person to sign for. However, the signing of legal binding agreement may need the signature of “power of attorney”. When a person is granting the power of attorney to another individual, the proper way to complete this is as shown. However, should not be taken as legal advice and should not be used without first consulting your lawyer.

” First-Name Last-Name grants a power of attorney to her friend First-Name Last-Name to enter into contracts for the sale of his/her property.” This friend could then sign both the listing contract and any other contracts including the contract of purchase and sale. This agreement should be witnessed by another person. This should be done on the correct form provided by your lawyer of choice. Legal Counsel is recommended that all parties to a transaction be advised to have legal advice from separate lawyers.

“Subject to” Clauses in the purchase of your new home, condo, apartment or mobile home is a very important binding element of your agreement. If one or both parties are not clear, this can weaken your agreement and could alter the original intentions of the purchase and sale. The ideal subject clause is one whose criteria are so clear that it is completely obvious whether the criteria for satisfying that clause are met. When your looking at your clauses consider this. Is your clause subjective or objective? Here’s the difference:

A subjective - Is one that depends on the personal view of the individual who decides it.

An Objective - (in contrast) Is an objective clause that depends on the external event.

The more subjective the wording of a subject clause, the higher the chases the court system in British Columbia will find the clause to be uncertain. So how do you make your clause more objective? Make it clear so that everyone may easily know whether the clause is fulfilled or not. The more objective it is, the more you can prove whether the subject clause is completed or not.

Your local realtor is required to take a course on proper contractual writing and should have an innate knowledge of the law. If you have questions, don’t only present your questions or concerts to your realtor, but your lawyer as well. For the most part the experience of your realtor and the requirements put forth by the BCREA (British Columbia Real Estate Association) should be sufficient. In conclusion the be sure that all pages are numbered, the addendum is clear with signatures and that your “subject to” clauses are clear and objective.

Shane Toews is a Licenced Realtor who helps others to educate themselves on current real estate issues. He also provides assistance on how to locate quality homes, apartments or vacation rentals in Canada’s Fraser Valley area. Visit his website RentFraserValley.com for more information on Canada’s Fraser Valley Real Estate Market

Share This