When you intend to purchase a house and arrange mortgage with your financial institution, the bank offers you critical illness insurance with your mortgage. This benefit will pay off your mortgage should you be diagnosed with a critical illness that satisfies their policy definitions and requirements. But, prior to purchasing coverage through bank, it’s vital that you should understand the pros and cons of this decision by comparing it with a much more beneficial ‘personal critical illness insurance plan’. The below mentioned features of both options will provide you a clear view of these options and will help you make a wise decision in this direction.

Coverage Purchased from Bank

You do not own the policy. The bank controls your policy and the coverage you receive.

You have no control over cancellation The bank can cancel your policy at any time, by giving you a notice.

The bank controls your premiums They can raise your premiums at any time if they had a bad claim experience because; the nature of the insurance is a ‘group’.

Your coverage terminates when you refinance your loan. You will be required to re-qualify medically and your premiums will go up according to your age.

Coverage ceases if you change your bank If you switch to another bank that offers you a better interest rate upon your mortgage renewal, you lose your coverage. Your premiums might go up with the new lender as all lenders do not offer critical illness insurance coverage.

The premiums remain level while the coverage keeps on decreasing. Another great disadvantage is that though your amount of premium remains the same, the coverage keeps on decreasing gradually. For example, if your monthly premium is $200, it won’t change/decrease while the coverage will decrease with the decrease in mortgage amount. This proves very expensive for the client.

The proceeds of insurance are payable only to the lender You get nothing to aid your physical recovery.

Coverage is usually restricted to age 65 Most banks limit their coverage to age 65 while they don’t protect the later years of your life, when you are at the highest risk. The banks win, you lose.

Only 3 to 8 illnesses are covered The bank offers you protection from a limited number of illnesses.

Most loan officers are not licensed to be insurance agents. They cannot, by law, provide you with insurance advice as they are not trained or qualified.

A Personal Insurance Plan

You own your policy. You own your policy and decide the coverage you need.

You fully control the cancellation Only you can cancel your policy for any plausible reason.

Your premiums are guaranteed in writing not to change, whatever term you choose.

Your plan is portable. You can refinance your mortgage at any time. Your plan stays intact and your premiums don’t go up.

Proceeds are payable directly to you. You can use the claim benefit according to your needs such as paying down your debt, mortgage, out of country medical treatments, marriage or, CRITICAL ILLNESS INSURANCE: BANK VS PERSONAL PLAN Sandeep Ahuja educational expenses of your kids.

You choose the length of coverage: 10, 20, 25 years; to age 65, age 75, or to age 100.

It offers protection against a large number of illnesses Up to 25 illnesses are covered under the insurance policy.

Experienced and licensed independent brokers provide best coverage for your needs They help you to find the best solution.

It is quite evident that a personal critical illness insurance plan offers you far more advantages than the coverage obtained through bank. Thus, it’s wise to opt for a personal plan instead of purchasing coverage through bank.

As an independent insurance advisor working through Punjab Insurance Agency, I deal with different insurance companies offering plans for different types of insurance. I can explain to you in detail, the insurance plan options and coverage that are suitable for your needs and resources. Besides, I can also help you to purchase mortgage insurance, super visa insurance, disability insurance, critical illness insurance, extended medical plans, group medical plans, RESP, RRSP, travel insurance, TFSA accounts, health and dental plans along with estate planning suitable for your needs and resources. For a no obligation appointment, please call me at

Sandeep Ahuja
604-996-6862 sandeepahuja@punjabinsurance.ca