Difference Between Life insurance Vs Mortgage Insurance

    When I sit down with families that have mortgages, I usually ask if they have mortgage insurance with the bank? Or do they have insurance on themselves to protect their ability to earn income? I often times get a confused look, I then let them know that there are two people in this world, people who look at insurance as an expense or an asset, which side are aware of? As we pay for our mortgages monthly, we need to be aware that the bank is also a business and their main focus is to earn profits for the shareholders. So each product that they give, we need to be more aware and educated on, if it is actually benefiting us as clients or the bank. We always want to build our own financial future and not be another residual income for someone else, but the main issue with mortgage insurance is the underwriting process. Most don't know, that it is post-underwritten at the time of occurrence and the bank is the beneficiary. In the future, if you ever want to pull some money out for retirement it will not be possible as it is not accumulating any cash value inside. The coverage also goes down as the mortgage gets paid, and will keep decreasing as you continue to pay it back. On the other hand, if we understand how to have insurance work for ourselves, we can have the coverage in our favour and be pre-underwritten and we know it will payout along as its truthful. We can rest assured in the future we can withdraw this money out tax-free and provide us retirement supplement during those days. 

Questions to ponder about:

1. Do I view insurance as an asset or an expense?

2. Am I aware of the different ways to withdraw the money out my policy tax-free and structured properly so it is working for me?

3. Do I understand the difference between a post underwritten policy and a pre-underwritten one?