Protecting your Largest Asset!

For most people their home is their largest asset! In fact, most of our clients take years to save a healthy down payment, buy their first home, settle in and start a family. As their family grows, they usually outgrow their first home, and then eventually they upsize. We see this again and again. How often are we talking to our clients about insurance? Yes - insurance is only one part of a clients overall financial health: however, as part of their home buying team it cannot be stressed enough to ensure that our clients are protected!

We should always be asking them what is their plan if something should happen? If a borrower suddenly passed away or was off work greater than 60 days due to a physical or mental injury or illness. What would they do if a loved one was diagnosed with a critical illness, such as heart attack, stroke or cancer?

"Keeping our clients in their homes is equally important as helping them get there!"

There are many clients that may have an existing policy, but forget to consider the following: What were those funds originally intended for? Income replacement? When does the policy mature? Many term loans may not cover a client for the life of their mortgage. Also - What if the borrowings increased over the years but their insurance policies were never revised.

COST OF SELLING

If an uninsured borrower were to pass away and the surviving spouse and children had to move, the following are real examples of what could happen, especially in today's market.

• The surviving spouse may have to sell in a declining market and take a loss
• Additional costs would be incurred for sales commissions, taxes, penalties, legal fees
• The children may have to go to a new school while dealing with their loss
• The surviving spouse may not be able to qualify for another mortgage on their own

STICKER SHOCK

Many homeowners will ensure they have the right amount of coverage and are well protected. They may have independent policies, policies through their lender and maybe even work. Multiple coverages can be recommended as long as they complement each other.

There are still many clients however that remain unprotected in their home. Part of it is due to the sticker shock. They hear "insurance", and they see the premium and they don't believe that anything will happen to them, so they take a chance and don't protect themselves.

They just can't justify the expense - "It's too expensive!"

I might ask, "Relative to What?" If we consider how much we pay for car insurance every month, it's odd that we don't protect our largest asset, our family, our income, our lifestyle, our overall wellness. The annual cost is still far less than the cost to sell.

INVESTORS

Investors may think they don't need the coverage because it's not their primary residence and the rent covers the expenses. If a borrower had disability insurance and they were to go off work greater than 60 days due to a mental or physical illness or injury, they would have their mortgage payment made for them up to 24 months, max payment $3,000 per month. If that mortgage payment was made for them each month, then that rent becomes an income stream for them.

WILL & POWER OF ATTORNEY

Lastly, it is always recommended that a client have a Will & Power of Attorney especially when they are purchasing a home. Often times, their real estate lawyer can have that drawn up to complete at the same time that they close. This is a great best practice to discuss early in the home buying process with clients and recommend a lawyer that can do both. Our clients rely on us to help them get into their homes, let's continue to educate and inform them so they can STAY in their homes and potentially even leave a legacy for their loved ones.

Check out the Video Below, Your home, Your Lifestyle

www.rbcroyalbank.com/mortgages/_assets-custom/videos/homeprotector-video.mp4