In recent years, the federal government has made several changes to the rules for mortgages backed by the Canada Mortgage and Housing Corporation (CMHC), the government-owned agency that insures mortgages against default.
By law, Canadian mortgages that have less than a 20 per cent down payment must be insured in this way.
Essentially, this means that if you can't make your mortgage payments, and the bank can't get all its money back after selling your property, the CMHC will make up the shortfall. Without it, mortgage rates would be higher, since the risk of default would increase.
At the same time, most lenders encourage homebuyers to buy supplementary insurance programs — often labelled as mortgage balance protection — designed to pay off or reduce your mortgage balance in the event of death or critical illness.
While these plans are convenient, it’s important to realize that there are other options available when it comes to protecting yourself in the event of your death, suggests Ted Rechtshaffen, president of Toronto-based TriDelta Financial Partners.
In fact, while it sounds like a sensible choice at the time, insuring your mortgage this way can be more expensive than buying insurance sold separately through individual agents or brokers.
Typically, mortgage insurance pays off the loan’s outstanding balance — which is good for the lender, but creates little value for your family, he maintains.
A more customized policy, on the other hand, will pay the benefit directly to your family and they can then decide if they want to pay off the mortgage debt in full or deploy the funds towards more pressing needs.
Here’s another consideration: With mortgage insurance obtained from a bank, coverage decreases with each monthly payment — but the premiums don’t follow the same pattern. When you own life insurance directly, however, the level of protection remains fixed throughout the term of policy.
The mortgage market has become more competitive in recent years — and that’s a good thing. But if you change banks when your mortgage is up for renewal a few years later, keep in mind that you’ll have to reapply for coverage through the new lender.
This means submitting new medical evidence and paying rates based on your current age. If your health status has changed significantly since you last took out your mortgage, your new mortgage lender may not want to insure you.
Here’s another caveat: The mortgage insurance you buy through lenders usually terminates when the mortgage is paid off or when you reach a certain age, generally 70 years old. An individual policy can be held for as long as you want.
So, having determined that you might be wise to consider alternatives, there are a few options. The primary one is a term policy where the monthly premiums are guaranteed for a fixed period of time — say, over the next decade.
“If you purchase a 10-year term policy, then in 10 years we’ll broker a new policy to cover the balance of the mortgage,” explains Russ Smart, CEO of I.D.C. Insurance Direct Canada.
“If you still have your health, we can usually do it for about what you’re paying for the first 10 years as the principal to cover is less, having paid some of it off.”
Those who don’t want to take the risk of being uninsurable in 10 years and having to pay a significantly larger premium on renewal might opt for a 20-year term — by which time many will see their mortgage essentially paid off.
If you go this route, expect to “pay 25 to 35 per cent more in the first 10 years for this security,” Smart explains.
Because mortgage life insurance obtained through a bank is usually offered based on a brief questionnaire and not a medical, there’s always the risk of “post claim underwriting,” warns Rechtshaffen.
This means that medical issues are explored only after a person dies. “If you pass away, your medical records would be obtained and a claim could potentially be denied because of something not disclosed properly on the questionnaire,” he says.
In contrast, dealing with an insurance advisor or broker means all due diligence is performed up front. Thorough medical questions are asked and, if required, a nurse visits your home or office to perform a physical.
This way, barring fraud, you know that the claim will be paid out when needed according to the terms of your contract, Rechtshaffen maintains.
Tuesday, 4 February 2014
Thursday, 30 January 2014
Ontario’s Rate Reduction Plan: How You Can Take Advantage Now
January is a month when most of us are looking to save a little money, and Ontario drivers have some rate reductions to look forward to when it comes to car insurance. After plenty of talk, the 15% rate reduction that has been promised over the next two years is finally under way. January 2014 marks the date that the Financial Services Commission of Ontario has promised a report showing that car insurance rates are on the decline. That means this month is a good time to start looking at your car insurance bill.
What’s New For January?
The plan to bring rates down isn’t expected to reach the full 15%, but a few months back drivers were told they could look to save between 3-5% come January. The good news is that some insurance companies have already started to bring rates down. There are still plenty of issues including fraud and how claims are handled that are being worked out in order to get rates down even further, but there’s no reason you can’t get a little help with the monthly budget right now.
The Financial Services Commission of Ontario says they’ve already started meetings with representatives in a variety of areas, including the towing industry, insurance companies, and legal areas including policing. Those meetings starting in December and will continue as the changes are worked out.
Almost half of the recommendations from the Anti-Fraud Task Force have already seen action, which is one of the big areas the government has been looking at to bring about those rate reductions.
How Can You Save Money?
Government meetings and action are a step in the right direction, but you’re probably more interested in how you can actually see a change in your monthly payments. What can you do to see some results on your insurance bill?
The Financial Services Commission of Ontario hasn’t filed the quarterly rate approval for the final quarter of 2013, but that doesn’t mean you can’t get a better rate! Many insurance companies have already brought their rates down, and there’s only one way to find out how much you could save. Rates on your current policy won’t drop until your renewal even if your insurance company has made changes, so to get some budget relief right now take the time to shop around.
Comparing Car Insurance Rates
Shopping for car insurance isn’t high on most people’s list of enjoyable activities, but it doesn’t have to be unpleasant or time-consuming. If you haven’t use an online rate comparison service before, now is a great time to give it a try. Comparing rates online makes shopping for car insurance easier in a number of ways. It lets you get more than one quote all at the same time, and it’s low pressure because you aren’t on the phone talking to someone who is looking to sell you a policy. You’ll only have to enter your information once, and then you can take your time looking over the options.
Of course, the bottom line is the cost savings; after all, that’s the point of taking advantage of a rate reduction. When you’re comparing rates, however, make sure you take into account the reputation of the insurance company and the service you’re looking for. You’ll also want to be sure that the lower rate still offers you the same coverage. It’s not much of a good deal if you have to sacrifice coverage in order to get a lower rate.
Should You Wait For Renewal?
Most people are going to see their rates go down when their renewal comes through, so it can seem like a good idea to wait and see what happens when your policy renews rather than switching insurance companies. Whether or not you should wait depends on a few things.
First of all, you should check on any penalties your insurance company might have for early cancellation. You should also see what kind of new policy fees are involved in a new policy. If you’re getting close to renewal, it might be worth it to wait, but if you have a lot of time left before renewal, your savings could be considerable when you switch early.
Shopping around for car insurance, especially online, doesn’t mean that you have to switch. Since getting quotes comes with no obligation, it can’t hurt to check what’s available. With the new rate changes for January, you might find a deal you can’t refuse, and you won’t be able to take advantage of those reductions now unless you take the time to shop around.
What’s New For January?
The plan to bring rates down isn’t expected to reach the full 15%, but a few months back drivers were told they could look to save between 3-5% come January. The good news is that some insurance companies have already started to bring rates down. There are still plenty of issues including fraud and how claims are handled that are being worked out in order to get rates down even further, but there’s no reason you can’t get a little help with the monthly budget right now.
The Financial Services Commission of Ontario says they’ve already started meetings with representatives in a variety of areas, including the towing industry, insurance companies, and legal areas including policing. Those meetings starting in December and will continue as the changes are worked out.
Almost half of the recommendations from the Anti-Fraud Task Force have already seen action, which is one of the big areas the government has been looking at to bring about those rate reductions.
How Can You Save Money?
Government meetings and action are a step in the right direction, but you’re probably more interested in how you can actually see a change in your monthly payments. What can you do to see some results on your insurance bill?
The Financial Services Commission of Ontario hasn’t filed the quarterly rate approval for the final quarter of 2013, but that doesn’t mean you can’t get a better rate! Many insurance companies have already brought their rates down, and there’s only one way to find out how much you could save. Rates on your current policy won’t drop until your renewal even if your insurance company has made changes, so to get some budget relief right now take the time to shop around.
Comparing Car Insurance Rates
Shopping for car insurance isn’t high on most people’s list of enjoyable activities, but it doesn’t have to be unpleasant or time-consuming. If you haven’t use an online rate comparison service before, now is a great time to give it a try. Comparing rates online makes shopping for car insurance easier in a number of ways. It lets you get more than one quote all at the same time, and it’s low pressure because you aren’t on the phone talking to someone who is looking to sell you a policy. You’ll only have to enter your information once, and then you can take your time looking over the options.
Of course, the bottom line is the cost savings; after all, that’s the point of taking advantage of a rate reduction. When you’re comparing rates, however, make sure you take into account the reputation of the insurance company and the service you’re looking for. You’ll also want to be sure that the lower rate still offers you the same coverage. It’s not much of a good deal if you have to sacrifice coverage in order to get a lower rate.
Should You Wait For Renewal?
Most people are going to see their rates go down when their renewal comes through, so it can seem like a good idea to wait and see what happens when your policy renews rather than switching insurance companies. Whether or not you should wait depends on a few things.
First of all, you should check on any penalties your insurance company might have for early cancellation. You should also see what kind of new policy fees are involved in a new policy. If you’re getting close to renewal, it might be worth it to wait, but if you have a lot of time left before renewal, your savings could be considerable when you switch early.
Shopping around for car insurance, especially online, doesn’t mean that you have to switch. Since getting quotes comes with no obligation, it can’t hurt to check what’s available. With the new rate changes for January, you might find a deal you can’t refuse, and you won’t be able to take advantage of those reductions now unless you take the time to shop around.
Power and Luxury: The Cars of American Hustle and The Wolf of Wall Street
With the recent airing of the Golden Globes, the film award season has officially kicked off. Two of the big winners from the Golden Globes were David O. Russell‘s “American Hustle” and Martin Scorsese‘s “The Wolf of Wall Street“. Both movies are period pieces loosely based on true stories of greed, crime, corruption, and money. Often times, a LOT of money.
“American Hustle” tells the partially true story of two con artists being forced to work with the FBI to help catch corrupt politicians in later 1970′s-early 1980′s New Jersey. The Wolf of Wall Street” stars Leonardo Dicaprio as a corrupt stockbroker who runs a billion dollar firm through corruption and securities fraud in late 1980′s-1990′s New York City. One of my favourite things about period pieces is getting to see the different sets, styles, and gadgets distinctly from that era. In particular, the cars. Fortunately, both directors knew that filthy rich criminals cannot resist lavishly expensive cars. The characters of “American Hustle” do drive some impressive cars but there is no comparison to the cars belonging to the greedy characters of “The Wolf of Wall Street”. Corrupt politicians are rich, but corrupt stockbrokers are stinkin’ rich.
Let’s take a look at some of the incredible cars featured in these two films. First, the more subtle and economical cars of American Hustle.
“American Hustle” tells the partially true story of two con artists being forced to work with the FBI to help catch corrupt politicians in later 1970′s-early 1980′s New Jersey. The Wolf of Wall Street” stars Leonardo Dicaprio as a corrupt stockbroker who runs a billion dollar firm through corruption and securities fraud in late 1980′s-1990′s New York City. One of my favourite things about period pieces is getting to see the different sets, styles, and gadgets distinctly from that era. In particular, the cars. Fortunately, both directors knew that filthy rich criminals cannot resist lavishly expensive cars. The characters of “American Hustle” do drive some impressive cars but there is no comparison to the cars belonging to the greedy characters of “The Wolf of Wall Street”. Corrupt politicians are rich, but corrupt stockbrokers are stinkin’ rich.
Let’s take a look at some of the incredible cars featured in these two films. First, the more subtle and economical cars of American Hustle.
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