The sad case of a mortgage life insurance claim being denied to a grieving widow could probably have been avoided if the family had gone through a private life insurance broker, says one advisor.
“Clients with a dedicated insurance broker or financial planner will get a full-on, holistic analysis of their insurance needs,” says Stephanie Vaarsi, a Sun Life advisor. “They’ll get recommendations based on their total needs, which will empower them to make a decision that’s right for them; versus somebody at the bank, who says your mortgage is $435,000, and it is going to cost you $50 a month – do you want it or not?”
The story that made headlines involved the recently deceased Christopher Massa, whose mortgage and mortgage life insurance was with Scotiabank when he was diagnosed with lung cancer back in October. The bank denied the claim on his $289,000 mortgage, stating that the bank denied his claim “because he was not eligible for insurance coverage based on his health condition.”
That would probably not have happened had the Massas gone through a private broker, Vaarsi told Insurance Business.
“With a bank, it is very black and white. With an advisor, they are getting knowledge and information to make an informed decision,” says Vaarsi. “The client might ultimately only buy insurance for their mortgage, but they are making an informed decision that that is what they want to do.”
For Vaarsi, she sees a steady stream of potential clients come to her asking for an explanation or competitive quote that they have already obtained from a bank.
And for the client, it is information and an education that they are really seeking out.
“When people come to me about mortgage insurance, they usually come with a price from the bank,” says Vaarsi. “Because cost is always a factor when you get right down to it, we do the cost analysis, we educate them about the products – doing an apples-to-apples comparison of what the bank has to offer and what I have to offer – and give them the pros and cons of both. I don’t think I’ve ever had a client buy through the bank after doing a full analysis.” (continued.)
#pb#
It is that sort of knowledge and advice that brokers can impart to their clients that make them crucial to the process of selling life insurance, she says.
“I think brokers are key, because they provide the education to a client so they can make an informed decision. There are many products out there, and many pros and cons: mortgage insurance at the bank versus private insurance. And they, the client, need to understand that.”
