Understanding the value of independent mortgage insurance versus your lender’s policies means looking at what each policy can offer you. Please see the table below to see why a lender’s mortgage insurance plan doesn’t offer the freedom and security of insuring yourself independently.
Independent Insurance Policies |
Mortgage Loan Insurance from your Lender |
|
| Do I own my insurance policy? | Yes | No, it is owned by your lender. |
| Who can be the beneficiary of the policy? | Anyone you choose. | Only the lender can receive the benefits from the policy. |
| When does coverage end? | It depends on the term that YOU choose. | Coverage ends when the mortgage is paid. |
| Do I have the same coverage for the life of the policy? | Your coverage stays the same throughout the term of the policy.* | The coverage decreases relative to the value of the remaining loan. |
| What can your coverage be used for? | Any purpose. The benefits are paid as a sum to your beneficiary to be used how they wish. | The coverage may only be used to cover the balance on the loan. |
| Can I get lower rates if I’m a non-smoker/in excellent health? | Yes. You usually pay as much as 50% less on your insurance premiums. | No, premiums are determined under one rate system. |
| If I sell my home am I still protected? | Yes. Since you are the owner of the policy. | No, you will need to obtain a new policy. |
| Can I convert or renew my policy to change the terms or coverage? | Some policies may be renewed or converted to another policy. | No, you may not convert nor renew coverage. You may not transfer this coverage into a new policy. |
*With the exception of Decreasing Term Life Insurance