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There is a financial path that many Canadians go down. The path I am talking about is mortgage life insurance. Many people don't even know if they have it, but many of you do.

My advice: Don't do it.

When getting a mortgage, you are often told by your banker or mortgage broker, "In order to protect your family from the debt on your house, you should get mortgage life insurance. It's just an easy signature."

To be fair, offering this product may be the only option these professionals have. Just because it is the seller's only option, doesn't mean that it should be your only option.

This is usually one of the easier sales out there for bankers and brokers. But as a consumer, you should be aware that you are primarily protecting the lender.

How is that?
Well, if you pass away, the beneficiary on this type of insurance is the lender, not your chosen beneficiaries.

Why is this important?
If you have a family and you pass away prematurely, they may need the financial flexibility to cover off many needs. If you are the owner of a life insurance policy, your family will receive a lump sum payment that can be used for any purpose. With mortgage life insurance, the good news is that you will no longer have a mortgage to pay. The bad news is that there is no money to cover anything else. Your mortgage expense disappears, but what about the money that goes out the door for property taxes, utilities, food, clothing, transportation and other expenses?

Here are five other key reasons why it is better to get an independent insurance review than to sign up for mortgage life insurance:

There is, of course, a benefit to getting mortgage life insurance. It is easy. Easy is definitely worth something.

But when it comes to protecting your family properly, you don't want to be remembered for taking the easy route.

If you currently have mortgage life insurance, don't suddenly cancel it. Simply sit down with an independent insurance adviser and ask them to find you a better alternative. Ask all the key questions, and when you are comfortable, move forward knowing that now you are protected, not your lender.

This article was written by Ted Rechtshaffen, President, TriDelta Financial, and first appeared on GlobeandMail.com

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