Barry Choi: Mortgage insurance vs. life insurance: What's better for you?

While the concept of mortgage insurance is clearly beneficial, personal life insurance performs a similar function. The main difference is that life insurance isn’t tied to your mortgage, so it offers much greater flexibility. Understanding the difference between two products can help you select a policy that’s right for you.With life insurance, you get paid a defined sum based on your policy details.

There are universal/whole life insurance policies available, but they cost much more than term life. These policies are only beneficial in a few specific circumstances, such as estate planning for high net worth individuals. Buyers will also plan for future cash needs, such as post-secondary education costs for their children. The more insurance you need, the higher your monthly premiums will be. That said, getting term insurance when you’re younger, such as in your twenties, will cost less than waiting until you’re in your thirties.Article content

Some people might assume they’ll never change lenders, but it’s common for buyers to shop around for the lowest rates when their mortgage is up for renewal. If you do make a change, getting a new mortgage life insurance will likely cost more since you’ll be older.

Source: Insurance Report (insurancereport.net)

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