Why is Mortgage Insurance Frequently Denied?

Why is Mortgage Insurance Frequently Denied?

Remember the day that you signed off on your mortgage papers at the bank? You were probably overjoyed with the purchase of your new home and ready to start choosing paint colours and fabrics. That was likely the same day that the bank associate assisting you recommended you purchase mortgage insurance.

They may have explained that the purpose of mortgage insurance is to protect you and your family by paying off the remainder of your mortgage with monthly payments or one lump sum payment in case of illness, injury or death.

If you accepted, the bank associate likely asked you a few short questions about your health and handed you forms to sign, securing your mortgage insurance.

Every month after that, you saw a monthly premium debited from your account.

Then, one day, the unexpected happened and you found yourself unable to work and pay your bills. So, you submitted a claim to your mortgage insurance. You were probably devastated when your insurer sent you a denial letter, accusing you of lying on your initial application.

UN-licensed to Sell

One of the biggest problems with mortgage insurance is that the majority of people selling these policies are bank associates, most of whom are not licensed insurance agents. They do not have the knowledge or experience to take you through the finer details of the insurance policy.

They do, however, have sales quotas to reach so that they get their bonus at the end of the year. They will do anything to convince you to purchase the insurance, and may even gloss over the short health questionnaire in the application.

Convoluted Questionnaire

The health questionnaires in mortgage insurance applications are usually limited to a few questions. In fact, some applications have only one health question. The question(s) is typically long, vague and confusing to understand.

There’s a reason for that. When it comes time to pay your benefits, that same ambiguous questionnaire you filled out will be used to underwrite your claim for benefits.


Post-Claim Underwriting

Yes, you read correctly. The underwriting process occurs after you have signed up for coverage and only in the event that you submit a claim for benefits. Even if you have had the insurance for years, it’s only if and when you submit a claim for benefits that the insurance company checks into your medical records to see if you ever really qualified for insurance.

Qualifying for the insurance when you really need it is not as easy as one would hope. When a claim is submitted, the insurance company requests copies of your health records. Any details they find that were not included in the initial application, the same one you and the bank associate completed in mere minutes, will likely be used against you to allege non-disclosure or “misrepresentation”, and a denied claim.

But you thought you were covered. After all, they had no problem taking the premiums out of your bank account every month!

Big Business for Banks

Banks are making millions and millions of dollars by selling insurance to clients like you and investing these premium dollars. Their unlicensed employees are selling this insurance without the proper education or training to help consumers make informed decisions. The medical questionnaires in the insurance applications are deliberately misleading so that, when you are going through the most difficult time in your life due to an illness, injury or the death of a loved one, the insurance has an excuse not to pay you.

What does it all boil down to?

You were misled to think that you were protected, but you are not.

So, are you going to fight for the benefits that were promised to you that fateful day in the bank, the benefits that you have been paying for every month for years? Or, are you going to let the bank and the insurance company get richer with your money while your family is left homeless?

If you’re ready to claim what’s rightfully yours, we’re here for you. Over the past 25 years, our firm has helped hundreds of clients who have been denied their lump-sum mortgage insurance benefits.

Contact Share Lawyers and put our experience to work for you.

All initial consultations with our lawyers are free and there are no fees until we win your case.