There is a very unfortunate article in today’s Toronto Star about a widow who was denied the claim on her husband’s mortgage insurance policy because he answered a question on the application in haste. Here is a link to the article <a href="http://www.thestar.com/business/personal_finance/2014/07/04/banks_mortgage_life_insurance_has_flaws_roseman.html&quot;

Despite the face that the claim was as a result of Lung Cancer, it was denied because he was tested and treated in the past for a liver problem. Unfortunately this is not an isolated occurrence, and Scotiabank is not unique in their sell first and ask questions later approach. CBC's Marketplace outlined a similar story in 2009 (http://www.cbc.ca/player/Shows/Shows/The+National/Consumer+Life/ID/1304495460/?sort=MostPopular). All banks and the mortgage insurance offered by mortgage brokers all have the same terms and conditions. It is not fair, it is not right, but it is what it is.

Ellen Roseman's article about Mrs Massa illustrates all the pitfalls with mortgage insurance and other creditor insurance products (ie. insurance that will pay off the balance on your credit cards):
-Tied selling. It is illegal for the bank to make you take their mortgage insurance as a condition of them loaning you money.
-Limited questions asked. Giving you the illusion of being covered.
-Post claims underwriting. They will look for any reason not to pay the claim god forbid one is made.

Despite Mrs. Massa's and the author Ellen Roseman's desire for the banks to change the product and their policy, there is a better option for consumers to protect their families— traditionally underwritten term insurance. It takes a little more work, but since it is usually less expensive than mortgage insurance, it saves you money today and peace of mind tomorrow. Contact me or your life insurance broker which is best for you.