(Ontario Real Estate Source)
By Brian Madigan LL.B.
Who would ever buy life insurance from a bank? That would be rather unusual.
But, it actually happens quite often. Banks offer life insurance to match the outstanding debt on a mortgage or personal loan. But, it’s not like buying life insurance generally.
The bank’s representative is not qualified or licensed to sell life insurance. That doesn’t mean that they are not trying to get you to buy it. Frequently, they make a commission or bonus based upon your purchase.
So, let’s say you buy it. That means you get to pay premiums until you die. So far, so good. You “qualified” to pay the premiums. But, now you’re dead, does your beneficiary get any money. Now, that’s a totally different question. This would be a good time for the bank to start the underwriting process to see if you are insurable.
That process should have been undertaken right at the outset. The underwriting process should begin at once as it does with most insurers. If there is going to be a potential problem, then the insurer AND THE INSURED both need to know about it from the outset. If there is a slight medical problem, then that issue can be identified and a higher premium assessed.
In this way, both parties are protected. The insurer receives the higher premium appropriate to the increased risk, and the insured knows absolutely that he has life insurance coverage, and can plan his affairs accordingly.
The arrangement is fair to both parties.
Not so with the banks! They just collect premiums and then deny coverage when it is too late. Great scheme!
There really should be a law preventing unlicensed people from selling insurance.
So, the moral of the story is: don’t buy life insurance from a bank. And also, just in case you’re thinking about it: don’t buy life insurance from the people behind the refreshment stand at the movies.
I was going to say that “you’ll live to regret it”, but what I really mean is “your beneficiaries will live to regret it.”
Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com
