Brock Zimak on mortgage protection insurance

Adrian:

I'm joined today by Brock Zimak, who is a licensed insurance professional, and feel free to correct me on your title if you wish. So Brock, can you tell me a little bit about yourself and your business?

Brock:

Thanks, Adrian. Well, first and foremost, yes, I mean, licensed insurance specialist is the proper term. We in the industry, as we are joking, aren't competing with mortgage brokers. We are supposed to be a team when it comes to helping individuals purchase their home or protecting their assets. I myself have been in the industry for just under eight years now, bought into a book of business right out of university, and ever since I've been working with young, old individuals to review their current needs and work with mortgage brokers like yourself to assist in the transactions of purchasing their first time home.

Adrian:

In your words, what is mortgage protection insurance that gets offered by banks and credit unions?

Brock:

So this is where I always like to tell my clients, I hate the word mortgage protection insurance, because it's misleading to the average person. When I approach individuals, half of them don't even know that they have mortgage insurance. All they remember doing is signing the mortgage pamphlet or brochure, initialing and paying their premiums. When I ask them to check their mortgage statement, more often than not, they're paying a bi-weekly payment that they didn't know about. That product was sold to them by the mortgage broker who is not a licensed insurance specialist. However, they do know what they're putting in front of the client. They do know what it's supposed to protect. The problem is the client doesn't know what this is.

Brock:

So when I think of the word mortgage protection insurance, I myself know that all that is a fancier term for life insurance underwritten by the bank or the mortgage company themselves. The problem is too many people miscue or mislead or are misled to believe that that is property insurance through the general agency. So they think, yes, I have mortgage insurance, I'm protected. When they go to sign paperwork, they don't know that they're paying an additional fee for that. So differentiating mortgage insurance and life insurance, they are one in the same, the difference is mortgage insurance is underwritten post claim through the mortgage or the bank itself.

Adrian:

Most people that are getting a mortgage or renewing a mortgage are going to be offered mortgage protection insurance by their bank, by their credit union, or by their mortgage broker. It's required for compliance purposes to be offered. A client can accept or apply or waive that coverage. What alternatives can you offer someone who is getting a mortgage or who has a mortgage instead of the MPP plan that is offered in default?

Brock:

So when reviewing your mortgage options with that mortgage broker, all they are presenting you is a version of term insurance to match the length of your mortgage in turn to then pay the remaining amount of said mortgage. Term insurance is exactly that, the difference is this product is underwritten at application. It is fully approved. It is not misleading in any way, shape, or form. And what it does is it protects the overall asset or the dollar as a whole unlike mortgage protection insurance that simply protects the declining mortgage over the term of said mortgage. So too many people believe or understand that their mortgage is protected, where in theory they're underwritten post claim. So that is the biggest difference between the two. There is a documentary and anyone who's listening to this podcast and you own a home or you're thinking about owning a home, I highly recommend you pull up YouTube.

Brock:

It's a CBC Marketplace study, and basically all it shows is not the misleading information, but simply the knowledge that a mortgage broker, their specialty is the mortgage itself. Their job is to save you money on a monthly basis in relation to your mortgage. Their job and their expertise is not on the insurance and the protecting of that mortgage. That is our job. Same way a real estate agent, their job is to find you the best house. So, in theory, in that transaction, there should be three specialists at the table. So I recommend you go to the CBC Marketplace, and basically on YouTube, it's 10 minutes, watch it. It shows the exact explanation of what we're talking about. And if you have any questions or are concerned or not sure what we're even talking about, look at your mortgage statement and check and see if you're paying a biweekly payment for said product. You may be surprised that you are and you never even knew it.

Adrian:

We're actually going to add the link to that YouTube video from CBC in the show notes of this episode. You touched on it a little bit, but on a higher level, instead of just mortgage protection, why should someone actually speak to a licensed insurance specialist for planning purposes in general?

Brock:

Well, first and foremost, our job is to find and assess a needs analysis to figure out what you are in fact protecting and or need to protect the mortgages and everything. You have cars, you have boats, you have toys, you have kids to worry about. You're protecting the future of all that. So whether you meet with a licensed insurance specialist or really anyone for that matter, there is a needs analysis that needs to be done and protected and looked over. So when I meet with clients, first and foremost, budget is everything, as we've spoken to before, Adrian. Some people think they need 10 million bucks. They then find out that that just isn't feasible. Then they look at, well, they have their mortgage payments, they have everything on top of that.

Brock:

A lot of products will bundle disability or critical illness into that product as well, which you don't need to get into. But the major difference between the two and or what I like to protect is your overall wellbeing. So the biggest difference too, between the two is when you do purchase mortgage insurance, it is tied to the mortgage itself. Where, when I meet with my clients, they want to leave money to the kids, they want to leave money to the surviving spouse, whatever it is, that all plays a factor into that total number. And as long as premiums are paid during that specific term, the full payment is paid out.

Adrian:

Generally speaking, is regular term insurance going to cost less or more than mortgage protection insurance.

Brock:

So that's the weird thing in all of this. You'd think that the easier product to apply for, the one that is pushed through by mortgage specialists, Brinks, whoever, would be the cheaper and easier product to apply for. The irony there is the only, say, downfall or negative to applying a traditional base is they're asking a few more specific questions upfront. However, assuming you are approved with no rating, 99.9% of the time, it's actually a cheaper product. I have yet to come across one that is the reverse where the bank's was actually cheaper than the traditional offering. Now, there are certain factors. There are ratings that come involved. There are stipulations or issues that arise. I have met with clients that have gone through the bank process, they answered the one or two questions, they got approved. I then meet with them, they got denied. So I'm the bad guy in the situation.

Brock:

The problem is, and I try to explain to them, if you got denied through me, what do you think the chances are you're going to get denied post claim if anything happens to you or your wife or husband? They don't understand that at the end of the day, the bank post underwrites, we pre-underwrite. That is the biggest difference between the two. So you are understanding that you are a high risk from the start whether you have high blood pressure or high cholesterol, you name it. They will look in your medical records, and the part that I liked the most about that CBC Marketplace, and you will see is, the general questions are meant to be misleading. That is the way they are designed to be presented. You as an individual, and it happens all the time, in our industry, there's no black or white. It's gray questions left, right, and center.

Brock:

If you went to your doctor and they told you you might have high blood pressure, you never consider yourself now someone who has high blood pressure the rest of their life. You just say, "Oh, my doctor hinted that it may be high." So the problem there is your doctor then writes that in your MIB report. You then leave, you fill out the application at the bank, and the mortgage broker is not misleading at all. The question is misleading and that's the problem. It states have you ever been treated for or been diagnosed with high blood pressure? You, the individual, will answer the question, "No," because you were never told you were. However, me, I may answer the application the same way. I'll ask you the same question. You'll say no, they then look at the medical records and say, "Actually, your blood pressure was high. You do have this and you are on this medication." Half the time the client doesn't even know they were.

Brock:

Now, we're talking 20, 30, 40 year olds. A lot of 67 year olds, they know what medication they're on. So when I'm meeting with clients, a lot of them, even though you may have answered it truthfully in the eyes of the insurer, it was fraud. And that is the problem that may arise where that is never determined until post-death through the mortgage option. Pre-option, with me, they will find it, they will rate you. So I ask my clients all the time, would you rather pay double or triple for something you know you're getting protected or a third of the amount and get denied post-claim? More often than not, especially when we talk about all the other pros and cons to the two, they would rather. And there's some that'll just opt out altogether. They look and they go, "You know what? I don't trust this whole system if that's what you're telling me." They opt out all together and at the end of the day, that's their decision.

Adrian:

Mortgage protection, or the mortgage protection planner, MPP, that is generally offered by most financial institutions and there's various versions and providers of it. I know in our channel, it is free for the first 30 days, and as long as you cancel it, the provider will actually refund 60 days worth of premiums. So is it a fair assessment to say that there may be value in applying or accepting it upfront, that gives you that month time to go and speak with a professional to place adequate proper term life or alternative product coverage, and then go and counsel the MPP plan? Would you say that that's a fair process?

Brock:

Absolutely. I mean, when you first start this process, it's overwhelming. You're dealing with your real estate agent. You're dealing with your mortgage broker. You're dealing with your lawyer. You're dealing with 50 papers you've never looked at in your life. And you're stroking a check for three, four, or five, $600,000. It's overwhelming. Just like going through the wedding process, a funeral process, it's an overwhelming experience, and 99% of the time you are roped into something you don't understand and or even want. I always tell my clients it's the right option to accept it immediately. However, I also recommend anyone purchasing a house, look at the alternative before you sign the final paperwork. I put term products in place and critical illness products and disability products long before they sign their final product. They then know with certainty, they are denying this for a reason.

Brock:

Now, there are products we sell too not necessarily on the traditional road, but the non-medical written options through companies like CPP do offer 30 days free as well. So for those that are a little higher risk or don't like the needle option or the medical option, there are alternatives that are a slight increase in premium, but they do give you that first 30 days as well. So, there's tons of options out there. At the end of the day, it never hurts to ask. But it is overwhelming and amazing to me that most people don't even know they have this from the start.

Adrian:

Brock, it's obvious that you have at a lot of expertise and knowledge on this area involved for protecting your investments, protecting your family. How can people reach you?

Brock:

We actually just moved into a new office. Part of a general agency, at 2579 Pembina Highway under Manders Cherewyk Insurance. I'm all over the city. I am mobile and this industry is now mobile. So my contact info will be posted with this link at some point as well. Phone number is (204) 296-0103. And we do have cheat sheets. We do have slight emails to compare the two. At the end of the day, I want to leave this discussion with a one topic. If you do have mortgage insurance, you didn't mess up. The mortgage broker did his job. He was told to present this. At the end of the day, if no one did present it and the banks would never lend money, they need to protect themselves at the end of the day as well. There is no bashing here. I love mortgage brokers just as much as I love real estate agents. We all work hand in hand. There is better products. There isn't necessarily bad products.

Brock:

So when you do look at this, I just recommend anyone listening, pull out your mortgage slip, look at your bank statement, phone your mortgage broker, and say, "Am I paying for this? I don't remember." You might also remember, and it'll be the first slip you actually had to check and accept or decline, take a peek at it. See what you're paying. Text, call, email. Worst case, they'll send you a response back with just a general alternative. Term insurance is the easy replacement, but there are many pros and many cons to the two. But from day one, except it, as Adrian said. Except it, because that's the easy thing to do. Then ask the questions. Or if you are in the process of buying and you're sitting down with Adrian or any other real estate agent, ask the question beforehand. It never hurts to ask.

Adrian:

That was Brock Zimak with PZM Financial Services. And the website is www.pzmfinancial.net. We'll have all of these links and a transcription of the episode just right below on the episode site. Thanks for joining me today, Brock.

Brock:

Thank you so much.