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Mortgage Solutions for the every day Canadian mortgage consumer. Are you thinking about becoming a mortgage broker learn first hand what you should look for in a brokerage and what you need to be successful.
Len 00:02
Welcome. My name is Len Lane, and I am the founder and president of Brokers for Life Inc. And we are Dominion Lending Centres in Western Canada. The topic of our podcast will be about what we consider to be Real Life Mortgage Solutions.
Len 00:20
Welcome back. Over the last couple of episodes, you know, we've been talking about insurance. We've talked about Mortgage default insurance with Sagen. We've talked about title insurance with FCT, First Canadian Title. And today we're going to talk about the most important one I think of all three, life and disability insurance. Our main provider, our only provider is Mortgage protection plan through Manulife. And today, my guest is Kyra Wong, Senior Vice President, insurance products for DLCG. Welcome. Maybe give us a little background on your experience in the industry.
Kyra 01:01
In the industry? Well, I started off as a mortgage broker, actually, joined insurance about 20 years ago, but I had a personal experience as a mortgage broker was something happening to one of my clients that really turned my head around about the way I was offering it. And, you know, levelling up my own way of, you know, offering insurance to clients. So, I learned through the school of hard knocks. And that's part of the reason I'm passionate about helping educate mortgage brokers today.
Len 01:33
Excellent. So, let's dive right in, I guess, mortgage protection plan compared to bank insurance. How's that for a starter?
Kyra 01:40
Yeah, wow, there's no comparison. And of course, you knew I was gonna say that, it's actually really a tragedy that, you know, banks are really our biggest competitor out there. And yet, they offer non-portable insurance products, which means that if a client takes the insurance from the bank or their lender, they can never take the insurance with them in the future, it's not portable. So, if they have a health issue come up, and they would have to, you know, basically, if they became uninsurable, they're stuck there at the bank, because that means they would never be able to get new coverage, you know, down the road. Or even if they don't have a health issue come up, if they wanted to move lenders in the future, to take advantage of better interest rates, they'd have to cancel their insurance or reapply. And as people get older, insurance gets more expensive. So, it's a real travesty that people don't know that. And it's a deliberate retention tool that the banks and the lenders use to try and lock down clients to them forever and ever, and ever.
Len 02:42
No question that the portability we've seen, we've actually lost deals recently, actually was because the bank rate didn't change. And he didn't want to lose that coverage, because the new coverage, of course, was going to be more money. Right? So, important points. So, I know the bank penetration on mortgage and life and disability insurance is huge. I talked to former Bank agents on a regular basis. And they're sometimes in that 50% to 60% range of penetration, which is huge, right? I said, I keep telling them, if they were doing that here, they wouldn't have to worry about mortgages, they just do insurance. So, why do you think that is? Our overall personal rate at the company here is about 23% - 24%, maybe?
Kyra 03:30
Yeah, so at the banks, they basically recommend the coverage and they assume the sale like the starting point is basically you need this, you need to take this, this is very important. And so they don't bias the client against the insurance, right? I think with mortgage brokers, they have the best intentions at heart. And they'll say things like, oh, you know, you should go talk to a life insurance agent, or you should go talk to a financial planner. And that isn't wrong, they should. But what I know from 20 years of experience is that a lot of people will never get around to doing that or doing that in a timely fashion. Right? So, if they get the coverage right at the point where they're getting their mortgage, they have them walking out the door, which is awesome. And that way, if they never get around to getting other types of coverage or getting a financial plan, at least they’re not going to lose their home. Right? So, I think banks know that clients are probably not going to go out there and shop around or do it right away or get a will for that matter. So, many people don't even bother getting a will is another huge disaster when you're not doing that. So, they assume and they roll the premium into the whole payment upfront, right? So, they're not sort of tacking on this extra charge right at the very end. They sort of speak of a protected payment with principal interest, taxes and insurance. This is what your payment is going to be, right, so. Clients have that in their minds from the get-go and are comfortable with it from the get-go.
Len 04:58
Yeah, it definitely makes the difference, I think that the way it's presented is monumental difference between what we do. And I think, of course, we're gonna talk more about pro tips in the end, and we can kind of go through that some more at that point. Our payment plan I know is way bigger than the banks, I believe or nine times the monthly payment and no clawback after 90 days. Every time I say no clawback after 90 days, they go like what? So, how do you think that program came about?
Kyra 05:31
That's a good question. I'm not sure how they extracted that exact number. But it is very lucrative, right? And I mean, I think the national average premium now used to be $85. But you know, as time goes by, and real estate gets more expensive, and mortgages get bigger, I think the national average premium now is about $122. And so times that by nine, right, and then you can easily make over $1,000 per file just on the insurance. And if you're not making that as a mortgage broker, you know, the banks and the lenders are more than happy to make that on your behalf and lock your clients down in the process.
Len 06:10
Yeah, and that's funny because we see that at the lawyer's even right, where the lawyer has been sent to insurance document to present to the clients as well. I'm sure they just go here it is yes or no, and move on from there. But if it's at the bank, probably 30% of our businesses are to the banks themselves, and the rest is to the modelines. But yeah, they're they're all they're looking for that opportunity to sell that client that that life and disability for sure. So, we do some different things that DLC, we offer an exclusive trip. I've never made it. But Cheryl has made it many more times than I can count. Yeah. So, maybe talk a little bit about the rewards of actually representing MPP, or presenting MPP.
Kyra 06:58
Yeah, so the top performers' trip happens every year. And it's just a way to recognize people who go above and beyond doing, you know, what's best for their clients, making sure they get protected. But you know, even more importantly, it's proven, you know, the more customer transactions you do, the more you build a fence around those clients, right? And so if you do the mortgage, if you do the insurance, you're more likely to retain that client in the future, which protects the longevity of your business cycle, first and foremost, so this is bigger than just selling insurance. And so the trip is just to really recognize those brokers who approached their business, not like it's a transaction, but really a business, right? And with, you know, the hope of having a long business cycle with all of your clients.
Len 07:46
Lots of different advantages, obviously, to doing this. Can we talk maybe about I know, there's a lot of different ways that are presented, you know, in our own case, I've always implemented or suggested that there's a clause you need to send. And that basically says that we're required by law in the province of Alberta, to offer life and disability on your insurance. Regardless of your decision, we need this form completed and sent back to us, right? I am actually the only one licensed to sell insurance as the broker. What's a better way to maybe go about that for our clients? Of course, the other part now that's happening is the links to MVP through velocity have made a big difference, I guess, or a different way to present it. But what what are some of the pro tips that we should talk about?
Kyra 08:35
Pro tips, so, obviously speaking about insurance early on in the conversation, like I think right at the credit application stage, when you're gathering information from your clients, that's a really good point to say, Oh, and by the way, do you have life insurance? And if you do, you know, how much coverage do you have? Like what does that look like? Right? So, for example, if someone's got a $250,000 term policy, and you're putting them into a $500,000 mortgage, well, now you know there's a protection gap, right? So, then this is less about a shot in the dark about whether someone needs you know, insurance or not, you can speak more intelligently about where the pitfalls are, where the protection gaps are, if you've gathered some information upfront.
Len 09:17
So, in our velocity applications now there is that question. Do you have coverage? And do you know how much?
Kyra 09:24
And it also asks about what coverage too. Do you have benefits at work? Sometimes people say Oh, I don't need insurance. I have coverage at work, but people don't realize how skimpy that actually is. If you're in a situation you have to rely on it. And if you just think about this logically for a minute, you know, employers are in the business of getting employees back to work as soon as possible. So, they're not going to be giving you these robust, you know, benefits plans to make sure that you're comfy on the sofa, you know, binge-watching Netflix and eating Cheetos. No, they're going to make it financially pinchy for you so that you're gonna get back to work as soon as possible. And within our own statistics, we see over 56% of people go back to work before they even fully healed because they are feeling financial duress, right? They're feeling so financially pinched and squeezed, that they go back to work before they're even ready.
Len 10:15
Yeah, and we have lots of examples of that. One of my young clients in Fort McMurray making a lot of money as a bodyman probably 175,000 a year of skidooing on the Athabasca River, had to sand dune under the sand, clipped about 30 feet through the air and broke his hip. He's less than 30 years old. Breaking a hip is not something you really think about. But you know, of course, the first call is made he did that. Did I take the coverage on our mortgages and they had two. And of course, the answer was no. But what happened is he was the prime example of the coverage from work was only 65%, of what his base salary was not the tons of overtime he was working, right? So, those are always big examples there.
Kyra 11:00
That's a great point because it doesn't factor in overtime. It doesn't factor in, you know, bonus, and all that it's your base salary. So, it's usually pretty skinny. And that's done deliberately because employees want you to get back to work as soon as possible. And don't forget too when you get disabled, for example, there are costs associated to getting well, so you need money for that. So, if you have your mortgage payment, which is what's most people's biggest, like the largest financial debt every month, if you have that being covered by MPP, for example, you could use your work benefits, all of them, for everything else, there's no offsetting to that whatsoever. So, it's a really good idea to have your mortgage payment covered separately.
Len 11:41
You know you say, talking about starting a conversation early, what other part of the presentation, I guess, is important, or a better way to do it, maybe than what most people do.
Kyra 11:53
So, some of our top performers what they do and listen, with insurance, it really just comes down to confidence and how much you believe in the product. If you believe in the product, or that clients need or if it's important, then you're not gonna do a good job. You know, conveying that to your clients. The brokers who do the best, oftentimes, they have personal stories of things that have happened to them, or they've had something that's happened to a client, and it makes them very passionate about it, right? So, for my example, when I was working as a mortgage broker, I had clients that were purchasing a home and Chatham, Ontario at the time, and the husband died of a massive heart attack 10 days prior to the funding date, and the wife had no ability to qualify for that mortgage on her own. So, of course, you know, she's gone to the vendor and says, this is what's happened. But that vendor was also purchasing a property and said, well, too bad. You have to close on this. And if you don't, I'm gonna sue you. Right? It's like, Oh, my goodness, right? So, this is now you just lost your husband. Now you got this lawsuit gonna hang over you if you don't complete? And how do you complete that when you don't qualify for you, on your own? So, this is the sort of thing that people don't realize that so, when you can share stories, I used to say to every single one of my clients after that incident, this is what happened to my clients that I am not going to let this happen to you, you are taking this today, and I'm going to do a check in on you. There's a 60-day money-back guarantee, I'm going to do a check in on you at 30 days to see if you've got any other coverage in place. And you know, nine times out of ten, no they hadn't, right, because they, you know moved into the house are busy with all the things that people just don't get around to doing. I say doing those things that don't spark joy, right, like going out and getting a will, going out and buying life insurance. I mean, culturally, we are not taught to be comfortable contemplating our own mortality. That's just a fact we all know that, right? We've all put off things that we know are important because we don't like thinking about that's when we're fun to go shopping or play a round of golf. And that can wait till later, except sometimes later becomes never and then in the meantime, something happens. And guess what? Someone's losing their house, right? So, I think as a mortgage broker, you know, you are the financial expert, people are relying on you for your financial expertise. And you do have an obligation to make sure you're looking out for your clients and their best interests. And really, in terms of best practices, I think that means getting insurance in place right away, and you're encouraging them to go speak to a life insurance agent or a financial planner, I think that's great if they do but just know that oftentimes, that's not going to happen or it's not going to happen quickly. But your north star should be not just putting clients into mortgages, but making sure those clients actually can stay in their homes, no matter what happens and that they'll be, you know, financially resilient to weather life storms.
Len 14:41
Right. And I think one of the points that I've always made was, even though you're not in your house, but you've removed conditions on your actual purchase of that house, your estate will be liable for this mortgage, right? So, complete that sale.
Kyra 14:57
That’s a great point and when you have two people on a purchase contract. And if you are relying on both of those people, you know, their income to close, then you absolutely need to have the coverage effective right away. Otherwise, you know, it's a vulnerable situation. And it happened to me. So, it's a terrible experience.
Len 15:16
Again, lots lots of stories. One of the biggest ones I always remember, he had refinanced his house to help his girlfriend start a business. Unfortunately, he had an accident, while driving, and they had not taken the insurance because he was a little older, and it was expensive. But regardless, the business should have paid for that coverage. Right? So, just so that there's no liability left against the property if something did happen. And it did, unfortunately. Right. So.
Kyra 15:45
Yeah, I mean, I've always been of the mindset just to have all the insurance because I feel like it's Murphy's Law. If you don't have it, you're gonna need it. So, just get all the insurance. And then hey, you know, like, I always laugh at Gary Morris, because he always says, Well, I'm paying my insurance premiums it means I'm still alive. That’s a great line. So true.
Len 16:04
That's true. In his case, he probably needs lots of it. What else would you give us a pro tip to brokers and to customers, actually, I guess when you think about it, that both sides of this need to hear this, I guess.
Kyra 16:19
Yeah, I would say don't actively bias your clients like even though you might have the best intentions. Or you might not know if this is a good product or not. Or they're scared that it's not like the life insurance industry really loves to come down hard on mortgage creditor insurance products. And I understand it because the life insurance industry is thinking bank insurance, right, and bank insurance is not portable. So, that's why you get all these, you know, negative conversations that happened around it, but with this particular product, MPP was designed exclusively for mortgage brokers. And it's that's why it's portable, so clients can take it with them. I've had lots of mortgage brokers who are also life licensed, who are also financial planners, and they sell the disability product all day long. So, one of the really cool things about the product is that there's no financial underwriting involved. So, if you go see a life insurance agent for a disability product, they have to financially underwrite you. So, Len Lane, if you make $250,000 a year, because you're a rockstar broker, and you write your income down to $50,000, so you don't pay too much, you know, taxes? Well, if you go to get a disability policy, it's not going to cover you for your true income and your true lifestyle, because you wrote your income down to, you know, 50,000 on line 150 of your tax return. So, that's an issue, right? With the MPP product, there is no financial underwriting. So, it doesn't matter how much you make if you make $50,000 a year on your line 150. But you have a $10,000 mortgage payment. Manulife MPP is going to cover your mortgage payment, and they don't care about what your income is. So, this makes it extremely competitive and a really incredible product, and especially for self-employed individuals. Plus it's a group product. So, there's group savings. So, if you talk to financial planners who are mortgage brokers or life insurance agents, who are mortgage brokers, they will all tell you that they sell the disability product all day long. It's a really excellent product.
Len 18:18
So, talking about it being underwritten upfront, because I think that's the part that most people, when you're dealing with the bank, it feels like they come back or something happens and try to figure out how to not pay you. So, what difference does the underwriting upfront make?
Kyra 18:32
So, there's a lot of misinformation about underwriting, what I will tell you is that all life insurance is governed by the same laws in Canada. So, it doesn't matter, you know, if you're getting a policy from a life insurance agent, or even a bank, or MPP, is all governed by the same laws in Canada. And so the application is the first stage of the underwriting process, right? So, clients can answer those questions. I've always said, you know, when I've trained mortgage brokers if a client isn't sure how to answer a question, they can leave it blank, Manulife is going to contact them. But at the end of the day, if you know someone is answering yes to a medical question, there's going to be a Tella interview. And the insurance companies are going to do their due diligence to make sure that this is somebody that they can qualify for standard regular life insurance. But I mean, I've worked at Manulife for a decade and the company, I would say had a lot of heart when dealing with clients. They're not looking to not pay out claims, but they can't pay out fraudulent claims. So, if you forget, for example, let's do I'll do an example even on myself. I forgot to mention when I filled out my form. Question number three had asked about you know, do you take medication or bla bla bla and I had answered that no, but as it turned out, I was actually taking a topical medicated cream for rosacea at the time is basically when your skin gets red, if you eat spicy food or drink too much red wine happens to us fair or fair-haired friends. So, anyways, I called the underwriter back like six months later and said, Oh, by the way, I realized I probably should answer this question a yes. But I answered no. And the underwriter said, well, thank you for letting me know that. But you know, we would have given you the same coverage that we gave you at the time. So, everything's fine. And it's no big deal. Okay. So, insurance companies aren't looking to deny you for all these little tiny things. No, it has to be like a material misrepresentation. So, for example, if I were to have a heart condition and be taking heart medication, and then I didn't disclose that, and I died of a heart attack a year later, well, that's material, right? Like, that's the sort of thing and insurance companies going to be like, I'm sorry, but this is a problem, right? And as you would expect, and you can't expect them to pay off, you know, claims that like that, because that would just make premiums go up for everybody. And it had they known that the truth about that situation at the time of application, they would not have given, you know, the coverage out. So, it's just kind of common sense-type stuff. If someone's answering the medical questions, answered them thoroughly, honestly, and accurately, and if you're not sure, then go through it with a Manulife representative. And they're happy to do that with the client.
Len 21:13
We recently we had a client to see disability insurance because she was diagnosed with stage three cancer and had started chemo, right? So, they actually covered her for that, because she was unable to go to work, right? She wasn't able to do most things, actually, with chemo and everything. Of course, I thought that was quite surprising that they would consider that under the disability and not just the regular ailments sort of thing.
Kyra 21:39
Yeah, I don’t know all kinds of illnesses and accidents. And yes, and in fact, mental stress-related disorders, mental stress, are you stressed right now? Len, do you need some time off work? But I mean, I'm not making a joke of it. But actually, and especially since COVID, mental stress-related disorders are the number one reason why people are filing a disability claim. And, you know, it's just a fact of modern-day life, people feel very overwhelmed, and rightfully so. You can't blame people. But that's the number one reason why people are going on a disability leave today.
Len 22:16
Yeah, Yeah. I don't have stress on the carrier epidemic.
Kyra 22:19
You're like the most calm guy I know, like, just calm.
Len 22:25
I get excited. You know, I think it's probably been one of the best things like in all honesty, we left MPP twice, to another one that has an elephant. And I can't remember the third one was what we always end up back at MPP. Because A, we like the product, I've always thought it was fairly priced compared to what you would get anywhere else. I carried a disability insurance policy of my own for many, many years before I got too old, and they wouldn't let me carry it anymore. But you know, and I don't think I have never claimed on it, of course. But compared to what I was paying for that, it is a lot less money to be on the Disability Program or to pay for the disability that would pay out your mortgage or pay your mortgage while you're injured or something. Right. So it's, I've always thought it was a good place to be for our clients. And it continues to be that as far as I can tell. Anything else you would add to what we should do better? Or should clients should know, or?
Kyra 23:25
You know, I would just say, keep an open mind, I think, you know, unfortunately, brokers can get sort of swayed by others because like, Oh, don't do this, or don't do that without doing their own due diligence, without actually exploring and finding out for themselves. So, they just listen to the first thing they hear if, for example, life insurance agents can't sell this product. So, do you think that they like it that mortgage brokers have access to a product that they can’t even sell, of course, they're gonna say something bad about it, because they don't want you selling it, they want you referring all the business to them. It would be no different if they were, if life insurance agents had access to a mortgage product that you didn't have access to, you wouldn't like it either. So, just don't be like willing to accept the first thing you hear about something because it's oftentimes not true. Like find out for your self, find out about the products for yourself and how everything works before you make a decision. Because otherwise, I mean, when I see so many times, it's just brokers actively biasing the clients away from taking MPP, a fully portable product. And then the client is walking into the, you know, the bank or the solicitor's office and they're getting signed up and locked down with a non-portable product which is affecting the longevity of your business cycle. It's actually bad for the client and the bank is making that extra money on it instead of you. So, that's what I would say about that.
Len 24:50
Yeah, and something that you can go back to the clients as well and say they do actually do this, like you said, you know, checking back in 30 days later to see if they found insurance or not? The one thing that I've implemented into our CRM program is at the 10-month stage instead about the anniversary, sending out the letter again, that you supplied, right that, you know, asking them have you really taken life insurance? Are you taking them seriously? Are you really covered for disability? So, it's, it's constant for us. And we can get that to coverage for people who aren't actually our clients as well. Right?
Kyra 25:27
That's a good point too, because the lenders all campaign your clients after funding if they didn't take the insurance, so they all do this and Manulife has a lender channel as well, again, non-portable products. And if the client doesn't take it, they are campaigning your clients after funding. So, I really think it's important for mortgage brokers to be, you know, as good or not better, and then also do a 30-day check-in like, don't let the lender get that sale, right, just because they're, they're better at business mindset than the broker is right? Because a lot of brokers are just like, go talk to somebody, but it's just never happening. And that client is getting scooped away from them, you know, in that interim process there. So, yes, I think that doing the 30-day check-in is really professional, it shows that you care about your clients. And ultimately, I would hope that every broker’s, you know, North Star is not just a put a client into a mortgage, but also to make sure they can stay in their home. That really matters. And if you've gotten one of those phone calls, where something has happened, and someone's losing their house, you know how terrible that is. And it's awful to feel like, you know, you're gonna question, why didn't you do more? Why didn't you talk to them about it more deliberately and educate them better so that they're not in that situation?
Len 26:48
Okay, I think I'll leave it there. Kyra, thank you for your time today. It's a great product. And we're glad that we're still on MPP after all these years.
Kyra 26:58
Me too. Yay. Thanks, Len Lane.
Len 27:00
Thank you.
Len 27:05
Thanks for listening today. I hope you found the information that we provided to be useful in your mortgage journey. And remember, you can always find our associates at www.brokersforlife.ca/associates. Have a great day.