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Insurance can be intimidating and complex. That’s why it’s so important to seek out advice from unbiased professionals. In this edition of Mortgage 101, we are live at CityNews with Clinton Wilkins and Todd Veinotte, and joined by special guest Dan Lomas, financial advisor at Desjardins Financial Security Independent Network. Clinton, Todd and Dan dive into the world of insurance, discussing the differences between creditor insurance and whole life term policies, the underwriting process and how payouts and premiums are handled differently.
Todd Veinotte 00:07
And as part of Financial Literacy Month, we will have a couple of opportunities this month, today and later in the month to have Clinton Wilkens in studio and a special edition of Mortgage 101, your guide to homeownership, which usually airs on the weekend, which we had a weekend show already. But again, Clinton and Wilkins and entourage has joined us Clinton Wilkins, hello.
Clinton Wilkins 00:29
Hello, how are you doing? And doesn’t everybody love a good entourage though Todd?
Todd Veinotte 00:33
I mean, when you come in, you brought an entourage of people. I did a count. I think it was eight people you brought with you today.
Clinton Wilkins 00:38
I mean, I think that’s how we normally roll, isn’t it? You can tell, you can tell me I mean, we’ve been doing the show for a number of years.
Todd Veinotte 00:45
Yes. But you’ve never had an entourage of this size.
Clinton Wilkins 00:47
Okay, well, this is a special show. And of course, it is Financial Literacy Month, I think it’s one of the most important months of the year. And we’re all about education. That’s what the show is all about. But I’m happy to be back with you here you know, live. We haven’t really done a full Mortgage 101 live show, since the pandemic. So we’re back.
Todd Veinotte 01:05
We are back. And you brought along a guest to Dan Lomas, Desjardins Financial Security Independent Network. Dan, hello.
Dan Lomas 01:14
Hello, Todd. How you doing?
Todd Veinotte 01:15
I’m well, welcome to the studio. And you’re part of the entourage?
Dan Lomas 01:19
I guess so. I’ve been working with Clinton’s office and his clients for the last six years. And what we do there is Clinton funds a deal. And then I take care of the financial side of the clients if they want to talk to us. So it’s a great value add for Clinton’s office. And it’s a great opportunity to help educate some some buyers out there.
Why mortgage owners should consider creditor insurance
Todd Veinotte 01:40
Absolutely. So Clinton, give me an example of when it might be a real benefit to have Dan in house and be able to move forward with whatever after the deal is funded. Give me some examples.
Clinton Wilkins 01:54
Sure. I mean, you know, as you know, the mortgage is the biggest debt of consumers life, and buying a house is their biggest purchase. And so many Canadians are underinsured. Now, I know nothing about life insurance, I’m basically just a consumer. But I know it’s important. And I think that’s kind of the first step. I know enough, basically to be dangerous, I’m not licensed to do anything with insurance. But through our process, we do offer creditor insurance from a couple of different companies. And, you know, I think that’s important about building that bridge for consumers. Sometimes it’s the first insurance that they’ve ever had in their life. And people know, they need protection, especially if there’s two people that are buying a property and we see this all the time, you know, we need both incomes to make it work. And as you know, if something happens, if one of those incomes is you know, was removed from the household, it certainly can have a lot of negative implications to their situation. And you know, it’s a, it’s a good conversation to have, we never want to have the conversation on the other end. And trust me, we have, you know, 10,000 plus clients, we do get the calls, things happen to people, either they, you know, become critically ill, they become disabled, or sometimes you know, what clients do pass away. That is the reality of life. And I know insurance is important. And that’s why I think having a second opinion and a second look is just really, really so important. I think people are sometimes under-advised. And you know, we really focus on being in that advice business. And I think having a partner like Dan, in our office, really, you know, elevates that situation for the client. And I think Dan is really unbiased. He deals with a variety of different insurers and financial advice products. So you know, we’ll let him talk about, you know, what his kind of job looks like every day. And you know, the advice that he gives to people.
Creditor insurance VS. licensed agent products
Todd Veinotte 03:39
Alright, Dan, let’s first drill down into what the difference is between what what can be sold when a mortgage is being through creditor insurance. And what the difference between that and what you can sell, as a licensed agent. What’s the difference between those two products?
Dan Lomas 03:57
Well, the two products, so creditor insurance can be sold by just about anybody selling a product, and it’s attached to your debt. And they usually ask three or four or five questions to make sure that you can generally qualify, and it’s a good stopgap. But there are times where those policies can be looked at at time of claim. So in the underwriting that are the small print, the insurer has the right to go back and check your medical history, your credit history at time of claim, and in some cases, they can deny the claim. Whereas when they come in and they sit and they talk with somebody and they buy an actual policy from an insurance company from a licensed agent. We do all the questioning all the medical research, all the underwriting before we issue the policy. So once you actually have the policy and you’re paying for the premiums, you have a policy that’s set in stone. So if you pass away, you’re sure that your beneficiaries are going to get what you had asked for. The only time that wouldn’t happen is if they find out that you actually lied on your application, but as agents, that’s our job to sort of flush that out beforehand.
Underwriting for creditor insurance and whole life term policies
Todd Veinotte 05:03
Right now, there are some questions that get asked, right, when you’re when you put that the product that you can sell Clinton in front of somebody, the creditor insurance, that there are, it’s not as though you say you, there are questions that you have, that get asked right?
Clinton Wilkins 05:03
I see that all the time. People, I think the number one thing people ask me, and I always tell people, you know, you need to be honest. But it’s around smoking. Smoking is kind of the number one thing people are like, well, I don’t smoke, but I kind of like I’ll have a smoke, maybe like, while I’m out, you know, for dinner or whatever. And I always tell people, I’m like, honesty is the best policy, especially with this insurance business, because you never want to get to a situation where you’re in a claim. But your claim gets denied.
Clinton Wilkins 05:35
Yeah, there certainly are some questions. And you know, I think they’re very kind of high level. And sometimes they will do like a paramedical, similar to what they will do with a whole life or term policy that Dan would do. But Dan is correct. Like, the underwriting is really done at that time of claim, and the insurance is different. And the way that I always tell people, especially around this creditor is, you know, this is a bridge maybe until you get a more permanent insurance. And you know, creditor, we don’t think of something like creditor or to be something that you’re going to have you know, for life.
Todd Veinotte 06:15
You can cancel at anytime.
Clinton Wilkins 06:17
Exactly. You know what, this is something where, you know, you can take, and you’re covered right now, especially, going out the door.
Todd Veinotte 06:23
You might be six months before you see Dan, and you go through bloodwork and all of this stuff, right?
Underwriting timeframes for whole life policies
Clinton Wilkins 06:28
Yeah. And maybe Dan could talk about the process, like I don’t know, like, how long does it normally take Dan to, you know, get a term or whole life policy in place?
Todd Veinotte 06:35
Fully underwritten policy, fully underwritten.
Dan Lomas 06:36
It really depends on a few factors, your age, how much insurance you’re looking for. Generally, if you’re looking for less than a million dollars worth of coverage, it’s a fairly quick process. Two or three weeks, once we do the application. Sometimes at higher levels over a million dollars, or if you’re over 40 years old, you’re gonna want some blood work, or, you know, a few tests and doctor’s reports. Or if you come to me, and you say, you know, I have this illness already. We’re going to ask for more information. So
Todd Veinotte 07:06
You could get a rider potentially on it for the illness?
Dan Lomas 07:10
You can get an exclusion for the illness and you can buy riders, but really what you’re doing is we’re underwriting the amount of insurance you’re looking for. And that could take anywhere from two weeks to six weeks. I’ve also seen some, a lot of the insurance companies are using AI to do some of the underwriting. So depending on how you answer the question, we’ve also had people approved right there in front of us.
Clinton Wilkins 07:33
Dan Lomas 07:34
They’ve changed a lot of the algorithms. And now based on how you answer the question, it’ll pop up new questions for us. So we don’t have to go to an underwriter. But at certain age brackets and certain price bands, they will start asking for more info medical information.
Premiums and payouts in creditor and term life insurance
Todd Veinotte 07:50
Yeah. Also, I would think that, you mentioned that this type of product that can be sold at time of purchase, that just covers the mortgage itself, right? Whereas if you sell a product, then the payout is you get the full amount. So this is a descending amount. Whereas with your product, it’s not a descending amount.
Dan Lomas 08:17
That’s correct. It’s a set amount.
Todd Veinotte 08:18
The set amount, and that’s very important. I think that’s a huge, because if you can, you can pay the same premium or less for something that’s not descending, is inherently a better product. Is it not? I don’t know if that makes sense or not does it?
Clinton Wilkins 08:32
You have to change the insurance.
Dan Lomas 08:32
Absolutely, it’s one of the things that we talk about all the time. The other thing is you’re buying a longer term, so it doesn’t change with your mortgage, or it doesn’t change with your, with your debt. So you know, if you’re in Clinton’s office, and he sells you one product from one institution, on this mortgage, and the next time you come back, and he’s discovered a better product with a different institution, as a broker, he can do that.
Dan Lomas 08:35
You have to change your insurance. And at that time, you may not be insurable or you’re insurable. But you’re five years older, and it’s a lot more expensive. Whereas if you buy a 10, or 20 or 30 year term, you get the same price for that timeframe. And you just take it with you. It’s not specifically attached.
Clinton Wilkins 09:10
I think the big the big thing is for us, like with the creditor insurance, it pays out the creditor. Where if you have the whole life for the term, Dan, you can correct me if I’m wrong, but that gets paid to the estate.
Todd Veinotte 09:20
Yeah, the estate.
Dan Lomas 09:21
It gets paid to the main beneficiary.
Todd Veinotte 09:26
And then they can do with what they will. Maybe they don’t want to pay off the mortgage.
Clinton Wilkins 09:29
Yeah, maybe not. People situations do change over time, right, for sure. And I think that’s what’s so important about sitting in front of like an unbiased mortgage professional, or someone like Dan to get that advice, because everybody’s situation is different. And I think that’s so so important.
Clinton Wilkins 09:53
If you’ve liked what you’ve heard, and you want to learn more, feel free to visit us online at teamclinton.ca.