An individual mortgage insurance policy, obtained directly from an insurer, puts you in control of your own coverage.
You own the policy. If you decide you want to keep some or all of the insurance after the mortgage is paid off, you may do so.
Your insurance is for a fixed amount, based on the original amount of your mortgage. If you purchase a policy for $200 000 and you die when your mortgage is only $100 000, your heirs will still receive the full $200 000.
You may name whomever you please as beneficiary – spouse, child, grandchild or friend. They receive the funds directly from the insurance company, meaning they are free to decide whether they want to pay off the mortgage, or invest the funds and use the interest to make the monthly payments.
An individually-owned policy is fully portable. When your mortgage renews, you are free to shop around for the best rate. If you decide to change lenders, your individual policy will come with you – completely unchanged from when you first obtained it. You will not have to reapply for coverage, and your premiums will remain unchanged.
An individual policy is underwritten based on your individual circumstances. Someone who leads a healthy lifestyle could end up paying a much lower rate for better coverage.