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Mortgage Broker News | 10 Jul 2014, 10:38 AM Agree 0
Brokers should warn clients of the potential pitfalls of mortgage life insurance, following one big bank’s negative press surrounding a claim denial.
  • Russ Robideau | 10 Jul 2014, 12:05 PM Agree 0
    Interesting. The CIBC also denied the claim of one of my clients. This Italian Immigrant struggled a little with the English language so he checked one question yes then scribbled it out and checked no. The bank's insurer ruled that since he had effectively answered yes and no the claim was denied. These insurance questions seem not to be well explained by bank mortgage staff and I'm not sure why. However, I now strongly suggest my clients talk to an Insurance Broker prior to making a decision on mortgage life insurance.
  • Okanagan Broker | 10 Jul 2014, 12:10 PM Agree 0
    Terrible time to find out someone is not covered...but a risk with any "mortgage insurance" that is basically underwritten/investigated at the time of claim. This is why I refer my all my clients to a Financial planner/Insurance Professional I trust & work closely with instead of just offering "mortgage insurance".
  • Marvis Olson | 10 Jul 2014, 12:11 PM Agree 0
    Banks don't seem to be held to the same standard as mortgage brokers---our rules are very clear & the paperwork goes thru audit before I can receive my commissions on a file.
  • Okanagan Broker | 10 Jul 2014, 12:15 PM Agree 0
    The quick & easy commissions offered by Mortgage insurance providers to line a brokers pocket is quickly outweighed when you encounter something like this...
  • Okanagan Broker | 10 Jul 2014, 12:15 PM Agree 0
    The quick & easy commissions offered by Mortgage insurance providers to line a brokers pocket is quickly outweighed when you encounter something like this...
  • Pete | 10 Jul 2014, 12:21 PM Agree 0
    What a shame this is. What seems to be missing here is not necessarily that credit life insurance is "evil", but that it would have been a godsend and comfort to this couple if adequately approved or denied upfront. If approved then the borrowers could proceed with indebting themselves with confidence. However if definitively denied then the borrowers would have had the opportunity of a "second thought" on whether they really wanted to indebt themselves and make this purchase at this time.

    Perhaps there is moral hazard in a bank selling insurance on its own mortgages. Would not a third party insurance company have less bias to "approve the loan" and simply center their adjudication on the insurance question alone - and approve or deny on its merits- unencumbered by any loan sale influence.

    They should have had life insurance, or they should have been denied at application.

    Brokers should warn clients. But not about the "pitfalls" of credit life insurance, but about the pitfalls of overly indebting themselves and their families if they are in ill health and if they don't know whether they are insurable or not.

    Insurance and mortgage debt isn't inherently bad.

    Bias that leads to bad advise and bad choices is bad.
  • Christine | 10 Jul 2014, 12:28 PM Agree 0
    our mortgage brokers use Industrial Alliance insurance which does underwriting up front not at claim time. There is a way to help your client properly and get compensated for it.
  • robert | 10 Jul 2014, 12:47 PM Agree 0
    Stay away from Scotiabank. These insurance companies are horrible. Biggest rip offs of them all. Never advise your clients to get mortgage insurance but advise them to get insurance from a broker.
  • Ron Miller | 10 Jul 2014, 12:58 PM Agree 0
    I wouldn't buy it,,, so I don't sell it.
  • Leo | 10 Jul 2014, 01:04 PM Agree 0
    Insurance in General is a "wordy" "not easy to understand" industry for an outsider. I work directly for the lender and we do offer C.P. for our products, and yes I have heard of these unfortunate stories from all Lenders and non lender insurance companies. The bottom line is "buyer beware." The banks do all their underwriting at time of application. In this instance the client must have not recognized he should have answer the health questions with "Yes." This would have triggered a follow up call for insurance underwriting by a professional underwriter and at this point would have determined if client was insurable or not. So how do I make sure this does not happen to my clients???????? Easy, I get them to answer "YES" to the medical question and insure that a professional underwriter contacts them directly to address any concerns they insurer may have regarding their ability to qualify for insurance. Better safe than sorry is my approach when it comes to inusurance. How would you feel if you were the representative who sold this insurance to your client only to find the could not receive their claim at such a tyring and emotinal time??? Personally I would have trouble sleeping......Protect your clients, protect your personal brand, protect your employer.
  • Brad Currie | 10 Jul 2014, 01:08 PM Agree 0
    Insurers purposely make it easy to let people think they are covered. They take their premiums but when there is a claim, they then look for technicalities to avoid paying the claims. Problem is when a customer needs the insurance and they are denied, they have no options at their disposal. Avoiding paying claims has become a profit centre for insurance companies. If you want a good read on the subject read "Delay, Deny, Defend" by Jay M. Frieman.. professor from Rutgers. Not saying insurance is a bad thing,but clients are never properly informed. Insurance companies are very good at explaining what is covered, but hide the details on what is not covered..they always stack the deck in their favour
  • Laurent | 10 Jul 2014, 01:22 PM Agree 0
    There seems to be some confusion in the comments section about the difference between Banks and Insurance companies.

    Buying bank (or lender) mortgage insurance usually involves a short questionnaire, fast approval and premiums payments. The up-front underwriting is minimal at best and your clients can not be confident that they own this insurance. The majority of underwriting in these cases is done post-claim (after something bad happens.)

    When you work with a proper life insurance company and are serviced by a qualified, licensed, professional insurance broker or agent, it is a much longer process to qualify for life insurance. The application and health questions are much more in-depth, the underwriting is done up-front and getting a policy approval can take 4-8 weeks on average. There is cost to underwriting upfront and there is the underwriting time needed. BUT when you are approved for a real life insurance policy you can feel confident that you own that policy and that it will pay out in case the worst happens (unless there's fraud or lies on the application).

    CBC Marketplace has an excellent documentary on this that all mortgage brokers should watch and show to all of their clients. Go to Youtube and search for "CBC Marketplace - In Denial".

    Or here is the link directly:
  • Christine | 10 Jul 2014, 01:51 PM Agree 0
    but there is no guarantee that your Financial Planner will position the health questions any better. It is up to the mortgage broker to tell client that to not leave out any instances of doctors visits etc. If your client doesn't speak/read English and you are worried about the Insurance application, I would start worrying about your Mortgage contract too. Make sure your E&O is up to date if you think its a language barrier as that is no excuse on your part when it comes down to the law. Better yet network/refer those people to a mortgage broker who speaks their native language.
  • brian | 10 Jul 2014, 03:08 PM Agree 0
    Lots of great information about mortgages. I have been learning a lot about home buying lately, and happened to come across Credit Sesame. Really happy with them so far in helping improve my "home-buying power".
  • Ron Butler | 10 Jul 2014, 03:17 PM Agree 0
    This stuff is actually easy to understand. As several posters have mentioned Group Creditor Insurance (which is bank insurance and MPP) is a quick questionnaire (or maybe one big question) up front and the policy is "instantly" issued but the claim is actually underwritten at the time of the death. A traditional individual life or disability insurance policy is underwritten prior to being issued often a nurse or a doctor will visit the applicant to perform a cursory exam, draw blood or urine and then a letter will be sent to the applicant's own doctor requesting a medical history, weeks go by as the underwriting process unfolds. So in that case although a death claim will still be reviewed it is not remotely the same the Group Creditor Program. Historically life claim pay-out on the traditional side is in the mid 90% range on the Group Creditor side nowhere near that level of claims pay-out.
  • Lior, Mortgage Edge | 10 Jul 2014, 03:57 PM Agree 0
    The markup on bank-issued MLI is 2,500% to 4,000%. MLI is a cash-cow for financial institutions because the payout rate is ridiculously low. The lenders continue to collect the premium from the borrower fully knowing that in the vast majority of cases the claim will be rejected. This type of insurance is not regulated and this is why it is pushed aggressively. The major banks not only place quotas on their branch staff and mortgage specialists to sell this crap but mortgage specialists who sell a certain amount of MLI get an increase in their commission on funded mortgages. The policies themselves are as good as toilet paper. As Ron explained, the coverage is based on a short upfront questionnaire completed by a person who is not a qualified insurance professional that is laden with confusing language. The claim is post-underwritten in contrast to a term or whole life policy which is pre-underwritten by a thorough questionnaire and medical exam. MLI has no cash value, the sole beneficiary is the creditor, the premium amount never decreases despite the mortgage balance being paid down.
  • Ottawa Broker | 10 Jul 2014, 05:17 PM Agree 0
    MPP is actually underwritten at the time of application, or at least it is for the program DLC has signed up for.
  • Ottawa Broker | 10 Jul 2014, 05:17 PM Agree 0
    MPP is actually underwritten at the time of application, or at least it is for the program DLC has signed up for.
  • Ron Butler | 10 Jul 2014, 05:47 PM Agree 0
    Ottawa Broker.......... unless MPP has changed every single thing about their business and no longer has a mortgage agent or broker signing an insurance document with the client a document that has a limited number of medical questions then I think you are innocently wrong. No Group Creditor Life plan is underwritten the same way traditional individual life insurance policies are underwritten. I think you should be very careful in what you are telling your clients.
  • Lori | 11 Jul 2014, 12:36 PM Agree 0
    Just a note to say that i recently got mtg life with my Scotia mortgage ... a nurse came to my home and did the full exam including blood, etc. A few days later i was told my application was approved.
  • Mortgage | 11 Jul 2014, 01:06 PM Agree 0
    Bank have the best service in a mortgage property than other agencies. Nothing is as important as it. For more details
  • Anonomous Broker | 11 Jul 2014, 02:55 PM Agree 0
    Creditor insurance is vastly inferior to contract based insurance, as others have mentioned, CBC's Marketplace "In Denial" does a great job explaining why. However, if you are selling MPP, there is a way to much better the odds of the client being paid out. Have the client answer "no" or leave one of the questions blank on the form. A licensed, qualified MPP insurance agent will the contact the applicant(s) by phone and take a full and proper application, rather than the 4 question garbage application.
  • Anonomous Broker | 11 Jul 2014, 02:56 PM Agree 0
    Creditor insurance is vastly inferior to contract based insurance, as others have mentioned, CBC's Marketplace "In Denial" does a great job explaining why. However, if you are selling MPP, there is a way to much better the odds of the client being paid out. Have the client answer "no" or leave one of the questions blank on the form. A licensed, qualified MPP insurance agent will the contact the applicant(s) by phone and take a full and proper application, rather than the 4 question garbage application.
  • Kyra Wong | 11 Jul 2014, 09:08 PM Agree 0
    I have been working with MPP and DLC for close to 9 years and can tell you that MPP's corporate mission statement is, "Do the Right Thing" and MPP does their medical underwriting upfront. In fact, with MPP if the client leaves the medical questions blank (which we advise if the client Applies) they will always be contacted by Manulife. If the client answers the medical questions and the mortgage amount is over $300k they will also always be contacted. If the mortgage amount is under $300k and the medical questions are answered all "No" the client can be auto approved. This is NOT post claim underwriting.... answering medical questions is the first stage in the underwriting process. Last year as an experiment I called my financial planner to see how much life insurance coverage I could get without having to go through any medical hoopla. I was told that as a female, non-smoker in my 30's I could get $250k in coverage as long as I could answer "no" to a couple medical questions. This is different how?? This is not different. All life insurance is goverened by the same laws in Canada. No insurance company in Canada can deny a claim unless their is material misrepresentation .... meaning that what the client failed to disclose is so significant that had the insurance company known about it at the time of application the insurance company would have never issued the coverage in the first place. The CBC Documentary that aired a few years ago was highly inflamatory in my view. One of the examples they used in the documentary was a gentleman named Lewis who answered all of the health questions "no", however, he had been dealing with a heart condition for 10 years and had been taking heart medication for it, then died of a heart attack within 12 months of applying. Yet, according to this documentary the bank and the insurance company are terrible because they didn't pay out. No insurance company in Canada would have paid out in this situation because they are goverened by and follow the same laws.
    What I agreed with in the documentary is that the insurance agent said that the medical questions on the bank applications should be broken down into about 30 or more specific questions to make it easier for the client and so nothing gets missed. I totally agree with that and it's exactly what MPP does when a client applies and leaves the medical questions blank, or answers yes to a medical question. It is a more sophisticated process this way and there is much less likelihood that a claim will be denied in the future. I can't speak on behalf of the banks but I know from my own experience with my own mortgages a lot of them will auto approve you up to $500k if not more for the life insurance. That in itself is problematic because the majority of people will automatically be auto-approved if they apply which means there is more risk for consumer error with material non-disclosures.
    Thank you to the Ottawa broker who has taken the time to educate himself/herself about MPP. If anything, MPP has to maintain a higher standard because not only do we need to pay claims to keep clients happy, we need to pay claims to keep our distribution channel happy- mortgage brokers. You don't become number one in your space by not paying claims. You become number one by underwriting your clients up front, paying claims and Doing the Right Thing.
  • Gloria | 11 Jul 2014, 09:59 PM Agree 0
    I don't know if you all realize it or not, but you use a lot of acronyms that other people don't understand, ie MPP, DLC, MLI. When I talk to my mortgage broker, she does the same thing. Don't you guys realize we don't all work in the mortgage broker industry? We would like to be able to follow along with what you are saying but can't? It is impossible when you use these abbreviations.
  • Ron Butler | 12 Jul 2014, 11:37 AM Agree 0
    Kyra Wong, you are employed by MPP I would hope you have a good opinion of it. By the way any company can say anything they want in their mission statement and that does not mean they will ever follow it. It is in an insurance companies interest NOT to pay claims, end of story. The question becomes can that company live with the reputational problem of becoming KNOWN for not paying claims, that is the careful path they must walk.
    It is clearly easier for an insurance company that works behind the screen of mortgage brokers selling it's product to the public to have less reputational risk issues than a company who's registered insurance agents have to put their name on the insurance product every day would have to worry about.

    If that CBC Marketplace program was directed at say; London Life, it would have been a huge issue for London Life, their agents would have been in an uproar. At MPP, who cares about that show, our sales people are not even life insurance agents, they are mortgage brokers.

    Ms, Wong, I don't mind you shilling for your company but DO NOT try to convince consumers your company is exactly the same as life insurance purchased from trained, regulated life insurance agents because it is NOT the same thing.

    As for the "Law" being all the same for all insurance that is simply NOT true. Insurance is governed by both regulatory law and also contract law when the question about who has to pay a claim ends up in court. Tradition life insurance is a contract between the insurance company and an individual, group creditor insurance is NOT the same thing at all.
  • Omer Quenneville | 15 Jul 2014, 06:27 AM Agree 0
    This is nothing new, I've been warning clients about this for years. The real crime is not being denied payout. The crime is the applicant has now missed out on an opportunity to buy proper insurance and being covered. The family is kicked to the ditch at a time of need while banks grab big profits with no intention of paying out. This tpe of practice in any other situation would be considered a crime with jail time and should be.
  • Omer Quenneville | 15 Jul 2014, 06:28 AM Agree 0
    This is nothing new, I've been warning clients about this for years. The real crime is not being denied payout. The crime is the applicant has now missed out on an opportunity to buy proper insurance and being covered. The family is kicked to the ditch at a time of need while banks grab big profits with no intention of paying out. This tpe of practice in any other situation would be considered a crime with jail time and should be.
  • Omer Quenneville | 15 Jul 2014, 06:28 AM Agree 0
    This is nothing new, I've been warning clients about this for years. The real crime is not being denied payout. The crime is the applicant has now missed out on an opportunity to buy proper insurance and being covered. The family is kicked to the ditch at a time of need while banks grab big profits with no intention of paying out. This tpe of practice in any other situation would be considered a crime with jail time and should be.
  • Colin | 16 Jul 2014, 10:40 AM Agree 0
    I have heard of this several times and from all banks...
    If you do not get a separate written contract like a normal life insurance policy that means there is not contract...and you are at the banks mercy...One of my clients thought mortgage covered but instead bank paid them all their premiums back...very misleading product
  • Rhonda Milton | 16 Jul 2014, 12:19 PM Agree 0
    I'm a financial advisor. This story hits me very hard. This article is about my in laws (my borther's wife's family).

    As an advisor it's my responsibilty it make sure all my clients understand the difference between private insurance and something offered at a bank or even broker.
    Almost everyone has a mortgage and I would venture to guess that at least 70% of those people bought insurance threw their lenders! So many families are at risk of the same fate the Massa family experienced, please take a minute to talk to an advisor and have the differences explained, once you understand it will become a no brainer, individual insurance is the way to go and often times it's much less expensive!!!

    My condolenses once again to aunt Angie and her family, I'm sorry that I wasn't able to reach out to you earlier about this, but I"m making it my mission to talk to ALL of my friends, family and exsisting clients moving forward. I don't want this to happen to anyone within my circle of influence ever again!
    If you'd like to learn more you can find me on facebook at
    Rhonda Milton Your Sun Life Financial Advisor
  • Ron Miller | 16 Jul 2014, 12:26 PM Agree 0
    Hello Rhonda,

    As a broker, when I sit down to sign a commitment with a client the last page is an acknowledgement that I do not sell mortgage life insurance. I tell clients that this page is the most important page in the commitment. This gets their attention. I let them know how important it is to speak with a licensed planner as their products are much better and safer.
  • Rhonda Milton | 16 Jul 2014, 12:37 PM Agree 0
    You are amazing your ethics should be appluaded!!! Your clients are fortunate to have a broker who's looking out for thier best interests. I would love to connect with you on a referral basis, you are the type of person I'd love to work with.
  • Elizabeth | 21 Jul 2014, 06:02 PM Agree 0
    What no one has yet mentioned in this discussion is that the nature of this product is to pay the mortgage. Period. When you look at conventional insurance, the payout goes to the beneficiaries, who then decide whether paying the mortgage off is what is best for the family. There are many times where keeping the mortgage running is the best things, while the cash is used for more urgent things. When the main wage earner dies - even if the mortgage insurance pays, cash needs may force the sale of a paid off house at a time that is not best for the family (stress after death, down market, etc.). In truth, the main client of mortgage insurance is the mortgage lender as it protects from mortgage default due to death. Finally, some models of mortgage insurance keep the premium at the same level even if the death benefit decreases as the mortgage gets paid down. No question: conventional insurance covers the needs and eventualities better than mortgage insurance.
  • Tiffany | 24 Jul 2014, 11:42 AM Agree 0
    When we purchased our home 9 years ago, we got a mortgage with our local ScotiaBank branch. I had been in the financial services industry for a year and was waiting for the mortgage specialist to put the mortgage insurance application in front of me. She was whipping papers across her desk and only wanted us to sign and initial them. She was getting very upset that I was taking the time to actually READ the documents. When the mortgage insurance paper finally came up, she said, "This is just another one of those papers that you just need to check the Yes box and initial here." I told her that we didn't need it because we already had life insurance for an amount larger than the mortgage and for a term longer than the length of the mortgage term. She argued with me over it for 10 minutes before she finally backed down. Now our mortgage is paid off and I still have my "regular" life insurance policy in force.
  • Sabrina | 27 Oct 2014, 07:45 PM Agree 0
    I have insurance to cover my mortgage and line of credit through a big bank. I was in an accident in 2013, not my fault. had electric shock and was left with lesions on my brain, damaged nervous system, heart and kidney damage, C2 C3 vertibrae damage and i am permanently disabled. Symptoms are much like a stroke and im 35 years old. I am a single mother of 2 and i purchased this insurance to give me peace of mind in case something were to happen to me. Well something did. I have trouble speeking and concentrating and keep getting the run around from the insurance company. some how they have lost my application by fax from my doctor, keep asking for more medical information. My father had to get the bank to confirm they got the fax. Almost a year and a half after my accident and still getting the run around. Thank god i had long term dissability through work or i would loose my house and everything i own. Knowing what i know now, i would never recommend or ever purchase mortgage insurance at the bank again. my next step is getting a lawyer involve, but still waiting for the denial letter.
  • Omer Quenneville | 27 Oct 2014, 10:55 PM Agree 0
    I'm sorry this has happened to you. Unfortunately without a denial letter you have no case. They will drag their feet on this for sure. I tell all my clients to always so no to bank insurance. Banks are in the business to make money, not pay out claims. They are experts at it.
  • Angela Wong-Liao - Invis | 31 Dec 2014, 11:37 AM Agree 0
    Almost all lenders love to sell mortgage life insurance because it is lucrative, especially banks and most of the banks have their own mortgage insurance department.

    In my opinion, it is very important that the bank officer understands the rules and guidelines of their company's insurance program and completely familiar with the mortgage insurance form, so that, the bank officer can guide his/her clients completing the forms correctly.

    The bank's insurance department should carefully examined the completion of the forms and check with clients directly should they have any questions, especially "Health" questions.

    It is indeed a very bad situation if clients thought that they are covered and declined when claimed.
  • Omer Quenneville | 31 Dec 2014, 11:50 AM Agree 0
    The only explanation that is needed for bank insurance is that it is almost always certain a claim will not be paid out. And if you require insurance, you should talk to an insurance agent, not a bank agent. And "clients" should always remember, when they are talking to the bank, they are not "clients", they are "customers". I don't know why banks are allowed to call their customers clients and no provide the protection a "client" is entitled to.
  • AnthonyC. | 31 Dec 2014, 01:36 PM Agree 0
    Its been my practice ever since entering the mortgage industry (almost two decades) to inform my clients of the importance of having adequate Life/Disability Insurance should the need for such protection arise, while carrying a mortgage....

    That being said, I advise "every" client, well in advance of their closing, that its in their best interest to address and discuss their insurance options and needs to a professional and licensed Insurance Agent, who is far more qualified than I could ever be, and 99% of the time I advise that they waive the "Creditor Life Insurance" product which is sold through my brokerage...

    Lets face it folks...these creditor life policies which the mortgage brokerage community supports are not in the best interest of the client... and were we to maintain our supposed "high standard in ethics", we should all be looking out for the clients interest...not the financial gain which these products generate for us, the lender and the agencies behind them.

    Shilling creditor life is just another money grab and no more worthy than the extended warranties one is pressured into buying by over-eager "sales persons", when purchasing electronics or appliances...
  • Bob | 02 Jan 2015, 11:35 AM Agree 0
    Its strange how many brokers on here say they never sell Mortgage Insurance & how awful it is, (which I agree with), and banks are awful for selling this product. Then why are so many mortgage brokers still selling it then? I worked at one brokerage and my friend was making more each month from selling the insurance than he was from his commissions. If its all about working in the clients best interest then shouldnt all mortgage brokerages stop selling this product and instead refer clients to a licensed Insurance Broker?
  • Omer Quenneville | 02 Jan 2015, 11:44 AM Agree 0
    Bob you answered your own question, it pays well, considered legal and that's why mortgage agents sell it. It is like any business, those that are only here for today, don't care about the damage they leave behind. Any other industry would be shut down for doing something like this.
  • Omer Quenneville | 02 Jan 2015, 11:44 AM Agree 0
    Bob you answered your own question, it pays well, considered legal and that's why mortgage agents sell it. It is like any business, those that are only here for today, don't care about the damage they leave behind. Any other industry would be shut down for doing something like this.
  • Jason Ellison | 09 Feb 2015, 10:43 AM Agree 0
    This is why having personal insurance is always better. Life insurance broker call 902 412 1599
  • Jason Ellison | 09 Feb 2015, 10:43 AM Agree 0
    This is why having personal insurance is always better. Life insurance broker call 902 412 1599
  • Steven | 10 Feb 2015, 12:28 PM Agree 0
    I am a licensed Insurance advisor. If you have Lender Insurance, I cannot stress how important it is to make the switch to Term or Permanent Insurance. It costs the same amount! Call me in Toronto 4168202869
  • Candaq | 10 Feb 2015, 06:19 PM Agree 0
    Banks do NOT do their underwriting at time of application, they do it at claim. They count on this so they can deny the claim.
  • DoctorEstate | 11 Feb 2015, 02:06 PM Agree 0
    Group Insurance

    You are not underwriten until claim time. If there is any possibility of a pre-existing condition, you are out of luck.

    That is why it is garbage. Only Accidental Death claims are for sure.
  • Actinica | 10 Jul 2015, 11:30 AM Agree 0
    I never had this type of insurance as it seemed unnecessary and a scam, but I just wonder - is it legal to take your money for it and then deny the claim?
    • Insurance broker | 30 Mar 2018, 11:47 AM Agree 0
      Unfortunately, yes, it is legal. By signing the contract, you accept to make the payments, even if the insurance doesn't pay out. They don't tell you this, because the person selling this insurance at the bank isn't a licensed insurance agent.
  • DoctorEstate | 10 Jul 2015, 12:42 PM Agree 0
    Can't be illegal, it's been around for a century, but that does make it good for the public, only for the insurance company.

  • sean | 24 Aug 2015, 08:42 PM Agree 0
    I had disability insurance on my morgage. After i got hurt at work bank would'nt help 6months later the said the cant do nothing because in behind in my payments. After long fight with WSIB proving my problem now im sueing the pants of the bank. :)
  • Tim Landry | 14 Oct 2015, 06:08 PM Agree 0
    First I suggest watching the Market Place program called "Risky Business". A few years ago when the banks were pushing to be allowed to sell insurance I telephoned the person who was acting as the spokesperson for the banks and asked if her staff was trained to ask the proper questions. Her response? I will have to get my life insurance person (they own an insurance company) to call you back about that. His response? I guess we will have to increase the training. I don't think they have. Remember the banks earn money on the mortgage - earn commissions on the insurance sale and if the claim is declined they earn money again. The only is the insured and the family. NEVER BUY INSURANCE FROM A BANK
  • Dave | 08 Feb 2016, 08:32 PM Agree 0
    In most cases now when an individual applies for a life insurance policy, not mortgage insurance, there are about 5 questions asked by the advisor. There is a followup questionnaire done with a nurse or health professional who understands what they are asking and gets the information required. This results in far less issues as the underwriting process progresses, and certainly at the time of claim. In addition most people believe that since the coverage is offered when they complete their mortgage application that it is required to get the mortgage. IT IS NOT! In Canada there are laws against tied selling and this would certainly qualify. If you want the coverage for your family you can get it anywhere. Check around and find out what is best for you, and what is best for the lender.
  • Bill Brownell | 13 Mar 2016, 06:32 PM Agree 0
    First of all I would never deal with
    Scotiabank -------ever !!!!!
    I have never had a problem getting or upping
    my life insurance to cover a mortgage .
  • Brian Poncelet,CFP | 26 Mar 2016, 12:50 PM Agree 0
    In general the problems with the banks are as follows

    Bank is the beneficiary
    Coverage is much less than owning your own policy.
    If you refinance the bank cancels coverage
    If you change mortgage companies coverage is cancelled.

    The cost over the lifetime of the mortgage through the bank is hundreds or thousands of dollar more than owning your own policy.

    Can not convert coverage to permanent coverage without a medical.

    Just a few points.
  • Mukesh | 28 Mar 2016, 11:28 AM Agree 0
    It's funny, we mortgage brokers preach to clients that they should deal with a mortgage professional for their mortgage, but's it ok to get your insurance from your mortgage broker or banker and not from an life insurance agent/broker. I don't refer my clients to anyone in particular, but I do tell them to speak with an insurance agent. 15 years in this business, I have not sold one MPP policy, because term ins. is far better than any mortgage insurance offered, hands down.
  • Paul Therien - CENTUM | 29 Mar 2016, 10:08 AM Agree 0
    I have one question that was not asked of this particular story in either the commentary (from what I read unless I missed it), or in the actual article.

    The individual who passed was diagnosed with lung cancer. Was he a smoker past or present? Did he work in a job that was high risk for lung cancer? If the answer was yes... there is no life insurance that would cover him. Just as for me, a former smoker, I cannot get coverage should I die because of a condition as a result of smoking. Yes, I know that some exceptions may apply providing I am prepared to pay a large premium.

    However, I am an adult and I make the choices I make in life and there are consequences that occur because of those choices. It is not anyone's fault but my own - I must be accountable for my decisions.

    I am not saying that all insurance is good. In this case, to pass judgement on a particular situation without fully knowing and understanding the situation... well it's a little like throwing darts in a dark room with a blindfold after being spun around and expecting to hit the bulls eye... you can't.
    • Insurance agent | 30 Mar 2018, 11:41 AM Agree 0
      Smoking does not exclude one from qualifying for insurance. Health conditions can. Example, if your smoking led to cancer, or emphysema, etc., then you can be denied. The problem is, there is no such question on the questionnaire for mortgage insurance for many, and by answering no to the single question ScotiaBank deceptively states make you "approved" (which it doesn't. It approves you to make the payments, not qualify for coverage), many people think they are covered when they are not.

      Also, an aside note for you to consider: Canada Protection Plan, CPP, offers insurance for many people who do not qualify for life insurance elsewhere. Having been diagnosed with cancer, or other illnesses onset by smoking, can still be covered, and at rates fairly comparable to standard life insurance policies. Talk to an insurance broker who can offer this company and see, you might still be able to qualify for some coverage.
  • Victor Matos | 19 Apr 2016, 10:31 AM Agree 0
    As a Mortgage Agent, I strongly recommend all my clients to decline the Banks mortgage insurance and apply for an independent Life Insurance Policy, just so that these nightmares can be avoided!
  • Tyler Fisher | 26 Jul 2016, 02:32 PM Agree 0
    Mortgage insurance is one of the best kept dark secrets of the industry. Should be illegal in my opinion. Unfortunately permanent insurances (universal life variable life and whole life) are equally as awful for the vast majority. Term policies should be the first go to 99.9% of the time.
    • Licensed professional insurance/investment agent. | 30 Mar 2018, 11:20 AM Agree 0
      Equally as awful? Permanent insurance pays out when mortgage insurance doesn't. They are hardly on the same page.

      That the majority of people are benefited by term hardly makes the other permanent insurance options awful, let alone unnecessary. These policies, in particular universal life, are used as insurance tax shelters to preserve wealth, and act as investment savings at the same time. Unfortunately, for many, they are poorly set up, and/or underfunded, resulting in a lapse, or loss for the individual. This isn't because they are inferior products, but because few people out there are licensed professionals in insurance and investments, which means the people setting most up aren't in the least bit qualified to utilize it to it's potential, maximizing investments within, and leveraging it to minimize taxation through it's use.
  • An industry professional | 19 Apr 2017, 08:18 PM Agree 0
    Very poorly positioned article that lacks research and industry knowledge. Banks are not the insurers of bank provided mortgage insurance. The insurer or insurance companies that provide, approve or decline the coverage are the same insurance companies that could deny a claim and the same insurance companies that this article suggests are so much better. They are not better, they are one in the same. For every story of denied mortgage insurance is a story of denied life insurance. A very close family friend of mine lost her husband to cancer. Mortgage insurance paid out with no hassle. Still fighting in court to get his life insurance 2 years later. Do your home work and answer the health questions thoroughly and honestly whether applying for mortgage insurance or life insurance or both.
    • Licensed professional insurance broker. | 30 Mar 2018, 11:14 AM Agree 0
      But the sales staff at the banks do get a hefty commission for selling the product. They also get to benefit by foreclosing a house that someone cannot pay off when their insurance fails to pay out, or the penalty fees they rack up when they have to sell because they are unable to pay.

      The insurers are not the same. As a licensed life insurance broker, I have contracts with multiple life insurance companies that do not offer mortgage insurances, because they ethically oppose them. No, for every denied mortgage insurance claim there is not a denied life insurance claim. They are very different products, and result in very different outcomes. While a mortgage life insurance is a post claim underwriting insurance, life insurance is underwritten at the time of sale, meaning you must qualify before you start paying for it. As a result, unless death is caused by suicide during the two year contestability period, the payout is guaranteed with life insurance. The only exception to this is if the insured deliberately lied on the policy. Yet even still, much of this cannot void a payout, like it does for mortgage insurance. Were you to mark down your age as 30 when in fact you were 35, the life insurance will still pay out, just at a reduced rate accord to what a 35 year old would have had covered for that premium stark contrast to a mortgage insurance claim which would be flat out denied for this.

      Also, many life insurers provide a "return of premium". While Standards and Poors rated mortgage insurance payouts on claims at only 47% paid out, Ivari life insurance guaranteed coverage (also post claim underwriting) paid out 98% of filed claims...and of the 2% they couldn't pay out, they gave the premiums paid back, unlike mortgage insurers.

      Life insurance is also offered through licensed agents, which mortgage insurance is not. It is crucial that everyone find a trustworthy professional fiduciary who is legally responsible for putting the client's best intentions first. The questions asked for any post claim underwriting must be updated every time a change occurs, lest they become voided. It is imperative that you have a professional who understands the workings to help you make the right decisions.

      Needless to say, there is a reason that even the agents selling mortgages and mortgage insurance at banks decline taking it.
  • professional insurance broker | 30 Mar 2018, 11:33 AM Agree 0
    As a licensed insurance broker, I find it appalling that institutions will deliberately deceive their own clients solely to maximize their own financial gain.

    On their website, ScotiaBank intentionally deceives people by stating:

    “Approval is based on answering one health question. If you answer ‘No’ to this question and your mortgage is $500,000 or less you are approved,” the bank’s website reads. “Answering ‘Yes’ to this question does not necessarily mean you won't be approved; it simply means the insurer will contact you for more information.”

    But what they don't mention is that by "you are approved", they don't mean approved for insurance, but only that you are approved to pay for the insurance, you likely are not qualified or approved for. That, you won't find out, until after you die, or become ill, when making a claim. Mortgage insurance is "post claim underwriting", which is a professional way of saying, we don't bother to check if you qualify until after you die. This, of course, means that said questionnaire isn't reviewed until after death...and what are the chances that the answers will still be the same by then? Died of cancer? Oh wait, you checked that you haven't been to the doctor for Cancer related appointments. What, you hadn't when you filled it out? Doesn't matter. The underwriting takes place at death...and when you died, you had been to the doctor for Cancer related appointments, thus you lied, and won't get paid out.

    Yeah, real "approved".

    Don't pay the same rate as a diabetic smoker in his 50s when you're healthy and young, for a decreasing coverage that you still pay the full amount for, that likely won't pay out anyways, only to protect the bank. Spend half of that to get a guaranteed payout you know before you start paying you are qualified for, that doesn't decrease, and pays to your family, who can decide to pay off the mortgage and face fees for paying off early like the former would, or invest it into tax free vehicles that generate interest higher than the interest on your mortgage while paying it off without those fees. At least give them the security and choice.
  • Carol | 19 Apr 2018, 11:43 AM Agree 0
    I was told by someone who sells mortgage insurance that one of the questions is "Have you ever been tested for cancer?". Most people will answer "No", however if you have ever had a Pap smear or prostate exam, you have been tested for cancer and this will invalidate your claim.

    Of course, if you answer "Yes", you won't be eligible for coverage!
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