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Mortgage Broker News | 21 Jul 2011, 07:00 AM Agree 0
As brokers clamour for more ancillary products from channel lenders, Boris Bozic is suggesting they’ve largely failed to capitalize on one available to them for more than a decade: creditor insurance.
  • Ottawa Broker | 22 Jul 2011, 03:45 AM Agree 0
    Any broker that TRULY looks after their clients best interest would NEVER sell creditor insurance. It is a far inferior insurance product than even a standard life term policy. I refer all my clients to 3 different insurance/financial advisors. My clients have better insurance coverage and the business I get back from those 3 referral sources way exceeds any commissions paid on creditor insurance. No need to bring up the show Marketplace did 2 years ago on creditor insurance, not a good product.
  • David Larock | 22 Jul 2011, 03:57 AM Agree 0
    Brokers don't sell creditor life insurance because it's a lousy product:

    http://www.integratedmortgageplanners.com/blog/buyer-beware/why-i-wont-sell-mortgage-insurance/


    Dave
  • Paul | 22 Jul 2011, 04:10 AM Agree 0
    Completely disagree with you Boris. You sell them creditor insurance which is paid on a declining balance with an institution you are now tied to if your health deteriorates over the term of your mortgage. Add to that, instead of receiving a lump payout in the event of a death, you have your mortgage paid off which may not be the first priority of the survivor. I woudl rather see my clients receive a lump sum, probabte fee, tax free. Selling creditor insurance in flawed and you are much better to refer on to a third party insurance agent.
  • BC Broker | 22 Jul 2011, 04:39 AM Agree 0
    As a high producing mortgage broker in BC since 1997, I cannot support creditor insurance enough. For those of you in business for any length of time, you will have a call one day that one of your clients has passed away, and did they take insurance? If presented properly, the product is good and worthwhile for all your clients.

    For those of you with life insurance broker referral sources you should not avoid the creditor programs. These insurance brokers will only close 25% to 50% of your clients at best and if the file is under $500k most insurance agents don't want the headache of going through the process for a couple of hundred in commission. All creditor programs can be cancelled at any time, so sign up your client and then refer to an insurance agent. At least they will be covered over the 3 to 6 months it takes an insurance broker to bind a client for coverage.

    I would also challenge any insurance broker to provide better disability coverage at the same cost as the creditor programs available, especially for lower income clients who need it most. It can't be done...

    Our company have had claims go through, specifically with the IAP creditor product, with absolutely no problems. The widow of one claim even wrote a letter of thanks to IAP on how well they handled the claim, originally a disability claim, then a death benefit. Just because CBC did a story on how bad creditor insurance is does not make it true!

    Last thing...for those of you commenting on commissions and how better it is to be paid referrals from insurance agents, you should be careful. Your comments may show up in a court room some day...
  • David O'Gorman | 22 Jul 2011, 07:00 AM Agree 0
    To BC Broker....Give your head a shake !!
    What happens if one of your client is one of the 15%-20% of annual claims that is NOT paid by the group creditor insurance companies? Great PR for you & your firm? Never mind being a litigation lawyer's %$# dream..."Mr. Broker you sold this life insurance knowing that the insurers pay off in only about 80%-85% of the claims? and you recieved a fee from the insurer of how much? and you claim you were acting in the best interests of your client?" Friend, you just bought that lawyer a new condo in Arizona with the fees he made roasting you.
    I acted as an expert witness for the estate & the beneficiaries, in a case where a mortgage agent, working for a now defunct brokerage that did not have E&O insurance, allegedly didn't do the job of selling the group life properly(won't go into details because the agent is still in the business).People buy a home in December,in January the husband is diagnosed with terminal cancer, deal closes in April, he is dead in June. Working class folks, wife is left with a $180K+ mortgage & 3 daughters under 12 years of age. Insurance company denies the claim. Estate & family sue now defunct brokerage & the mortgage agent in his personal capacity for $300k+. Insurance company fights it for the better part of two years and finally settles in a confidential agreement the day before we are scheduled to go to court. Left a rather unpleasant taste in my mouth about group creditor insurance in any form.
    If a mortgage brokerage wants to set up a subsidiary insurance brokerage & sell "real" life insurance, go for it. "Referring to the appropriate professionals" and recieving mortgage referral clients, great...But selling "garbage" group creditor life, where the risk is underwritten when a claim is made,(the borrower is dead) instead of as in "real" life insurance where the risk s underwritten when the policy is written(less chance of the insurer denying the claim)is the less problematic way of acting in your clients best interests.
    In my personal opinion selling group life is akin to selling snake oil & its is just about as useful.
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