TD Line of Credit

[rmorelan]

I also just signed through scotia and I heard a few things. I dealt with a great rep in Vancouver, but did all the signing at my local branch (in a fairly remote location, so I don't blame my local rep for not knowing certain things).

 

So first, the LOC life insurance as printed was based on $200,000, and is $120 per year based on my age.

-I asked why it was based on $200,000 since I only had $50,000 available the first year.

-She told me that the remaining insurance on the remaining $150,000 would go to my estate.

-She called the rep in Vancouver and he said that it could be changed to $30 per year based on $50,000, and that the remainder did not go to my estate, it is purely to pay off my LOC if I die

-I kind of stupidly asked if it is required that I get this insurance since it's an unsecured loan, and she said it might be.

I signed it just because it's "only" $30 and like some other posters here, I'm a little worried about others being responsible for my debt if I died. I'd like to figure out more about it though, and decline it next year if possible.

 

Weird that this is popping up - I mean they know for sure no one else is responsible but you (exception - you are married or in a common law relationship). Again the cost of your funeral may be an issue as you cannot pay for it with no estate.

 

Plus you may not even use the full 50K thus you are overpaying most likely. This is really the bank protecting themselves at your expense and even their profit. Bad idea - they work for you, not the other way around. It isn't about the 30 dollars - it is about the principle. Key concept - if you cannot trust them with the small, how can you trust them with the big? This entire process is to feel out the bank to see if you can do business before you really get to it (your end net worth will make 50k look like pocket money if you do it correctly). Pretty sure something silly has gone off the rails here.

 

I will talk to them about this and see if I can figure out what is going on. I am personally curious about what they are doing.

[Aetherus]

I equally just took a life insurance option on my LOC with RBC. I realised walking out that it made no sense since I had not cosigner on the LOC and therefore no one was responsible. He said I could take it off at any time which is the only reason I took it. Going to send him an email to remove this.

[lokiki]

With respect to my situation, I was denied through RBC (as I said earlier on another thread) and am super scared of not having funding this year. I still don't have my LOC available to me, and it's causing me anxiety on a daily basis. The 30$ a this point gives me peace of mind as there's one less thing to worry about them decding "Oh, we won't give her credit anymore". I know it's illogical but it is how it is. And I'm upfront about being kind of stupid about suggesting it, but really, if you were a bank wouldn't you want some sort of assurance that the LOC was insured?

 

So I guess I am feeling very vulnerable and like I *DO* work for them at this point. I really need the LOC. I cannot get government funding at this point (it will take a lot of work) and I have been extremely anxious about it. You don't even want to know what I was considering doing to pay for school this coming year.

 

And I am technically common-law, kind of, and I'm sure if I died and owed the bank tons of money they would find a way to go after him, even if we didn't file taxes together, etc.

[ploughboy]

-I kind of stupidly asked if it is required that I get this insurance since it's an unsecured loan, and she said it might be.

 

Remind her that "tied selling" (ie "if you take our loan you need to buy our insurance") is illegal.

 

Don't get me wrong, I'm a big fan of insurance for medical students, residents etc. My insurance is paid up. Life insurance is great, but what you really need to think about is disability insurance.

 

To quote Stephen King, sometimes dead is better.

[givemethenews]

To add in my story, this happened to me too. I went through Rod but signed the papers at my local branch in the GTA, and the rep there told me that my family would be liable if I died. I almost went for the insurance (since I didn't have any loan experience before that) but luckily called my brother when the rep left the room and he told me I was an idiot.

[rmorelan]

With respect to my situation, I was denied through RBC (as I said earlier on another thread) and am super scared of not having funding this year. I still don't have my LOC available to me, and it's causing me anxiety on a daily basis. The 30$ a this point gives me peace of mind as there's one less thing to worry about them decding "Oh, we won't give her credit anymore". I know it's illogical but it is how it is. And I'm upfront about being kind of stupid about suggesting it, but really, if you were a bank wouldn't you want some sort of assurance that the LOC was insured?

 

So I guess I am feeling very vulnerable and like I *DO* work for them at this point. I really need the LOC. I cannot get government funding at this point (it will take a lot of work) and I have been extremely anxious about it. You don't even want to know what I was considering doing to pay for school this coming year.

 

And I am technically common-law, kind of, and I'm sure if I died and owed the bank tons of money they would find a way to go after him, even if we didn't file taxes together, etc.

 

I get it! and that might be worth it (30 dollars for some peace of mind no matter if it is somewhat illogical). Plus the common law aspect makes sense as well. Now you have a factor extra to consider.

 

One thing though - and this is more of a concept thing - the bank has actually already factored in your dying as a risk factor in the interest rate they are are charging and the probability of future business. Believe me when I say very smart people have already though this though. You should never feel you need to top it up as it were. With loans risk is quantified (it is called beta by the way in financial speak - a risk factor) and used in the math. Do not ever feel need to be nice to your bank. This is business.

 

In theory now you should also figure out if the cost of the insurance they are offering is actually reasonable, or if you could (like I did actually) get a separate cheaper insurance package. You are paying 30 dollars for 50K of coverage. On a dollar for dollar basis I get twice as much coverage as you are. Anyway not to beat the point to death (ha!) but banks are and never will be your friends. I hope soon you feel comfortable enough to actually restore a proper relationship with your bank

[rmorelan]

To add in my story, this happened to me too. I went through Rod but signed the papers at my local branch in the GTA, and the rep there told me that my family would be liable if I died. I almost went for the insurance (since I didn't have any loan experience before that) but luckily called my brother when the rep left the room and he told me I was an idiot.

 

Man so this is wide spread. I am actually annoyed by that - it would be better if there was one idiot in a branch instead of many idiots or worse

 

More reason that everyone needs to know the basic financial rules - it is just like learning the rules to applying to medical school. If you know them you have a bit edge in the game.

[Starfish31415]

With respect to my situation, I was denied through RBC (as I said earlier on another thread) and am super scared of not having funding this year. I still don't have my LOC available to me, and it's causing me anxiety on a daily basis. The 30$ a this point gives me peace of mind as there's one less thing to worry about them decding "Oh, we won't give her credit anymore". I know it's illogical but it is how it is. And I'm upfront about being kind of stupid about suggesting it, but really, if you were a bank wouldn't you want some sort of assurance that the LOC was insured?

 

So I guess I am feeling very vulnerable and like I *DO* work for them at this point. I really need the LOC. I cannot get government funding at this point (it will take a lot of work) and I have been extremely anxious about it. You don't even want to know what I was considering doing to pay for school this coming year.

 

And I am technically common-law, kind of, and I'm sure if I died and owed the bank tons of money they would find a way to go after him, even if we didn't file taxes together, etc.

 

 

 

The security part definitely makes sense. I also called the representatives and as long as you only signed up recently, you can cancel the insurance and get a full refund (the deadline they gave me was 30 days, but I also heard 10 days from someone else).

 

You're with Scotia Lokiki? Because the lady at my local branch told me that for $50 000 I would be charged $50 per month for insurance, so $600 per year!! Not that she has any more credibility at this point but you would think that the numbers would at least be on the same order of magnitude.

[jmatt1122]

The security part definitely makes sense. I also called the representatives and as long as you only signed up recently, you can cancel the insurance and get a full refund (the deadline they gave me was 30 days, but I also heard 10 days from someone else).

 

You're with Scotia Lokiki? Because the lady at my local branch told me that for $50 000 I would be charged $50 per month for insurance, so $600 per year!! Not that she has any more credibility at this point but you would think that the numbers would at least be on the same order of magnitude.

 

I remember the insurance cost they quoted me being higher than the $30/yr, too.

[rmorelan]

The security part definitely makes sense. I also called the representatives and as long as you only signed up recently, you can cancel the insurance and get a full refund (the deadline they gave me was 30 days, but I also heard 10 days from someone else).

 

You're with Scotia Lokiki? Because the lady at my local branch told me that for $50 000 I would be charged $50 per month for insurance, so $600 per year!! Not that she has any more credibility at this point but you would think that the numbers would at least be on the same order of magnitude.

 

Those numbers are just plain wrong - I mean 600 dollars per year at the typical medical student category (age, health etc) would get about one million life insurance (approx).

[MD2015]

^ Agreed. And $100,000 10 year term would be $100/year.

[fugacity]

If someone wishes to pay for your funeral costs, are they obligated to pay off your debt as well before doing so?

[MD2015]

No. The debts of a deceased become debts of his/her Estate. Anybody is free to make a gift or donation to cover funeral expenses of another and this does not make the donor liable for the debts of the deceased.

 

Interestly, the widow of the deceased pilot of a commercial airplane that has crashed is advised to accept his Estate "under benefit of inventory". Let's say the pilot left savings and insurance to his widow of $2 million. Once she accepts his Estate, she becomes liable for his debts. So, if he is found responsible for the crash, causing his Estate to be liable for tens of millions of dollars, not only will the creditors be able to get the $2M, but they will be able to make the widow penniless.

[rmorelan]

If someone wishes to pay for your funeral costs, are they obligated to pay off your debt as well before doing so?

 

Yeah, absolutely not as mentioned.

[5th time the charm]

can you not get this cheaper through the medical association of the province in which you are enrolled as a med student?

 

The banks are making money on these people who may not know they have other options

[rmorelan]

can you not get this cheaper through the medical association of the province in which you are enrolled as a med student?

 

The banks are making money on these people who may not know they have other options

 

oh you can get cheaper insurance - but then it is tied to your estate and not the LOC. The banks would prefer the insurance because a) it is profitable and they are the sole person in line for the money no matter what (not so if you have other claims to the estate) and c) they are absolutely sure whether the LOC is insured or not (you could get insurance and then default on your payments and the bank wouldn't know as an example. If they provide the insurance they would definitely know).

[MD2015]

oh you can get cheaper insurance - but then it is tied to your estate and not the LOC. The banks would prefer the insurance because a) it is profitable and they are the sole person in line for the money no matter what (not so if you have other claims to the estate) and c) they are absolutely sure whether the LOC is insured or not (you could get insurance and then default on your payments and the bank wouldn't know as an example. If they provide the insurance they would definitely know).

 

I agree with the above, with one notation. When you take out life insurance, you can name a beneficiary. Should you make a third party (e.g., a family member) the beneficiary, then the death benefit does not form part of your estate. If it formed part of your estate (by naming your estate the beneficiary) and if you had no other assets, the bank would be entitled to payment of the LOC from the death benefit. However, if the death benefit is payable to a third party and if you had no asets, the bank would have to write off your LOC as a bad (uncollectable) debt.

[schmitty]

I agree with the above, with one notation. When you take out life insurance, you can name a beneficiary. Should you make a third party (e.g., a family member) the beneficiary, then the death benefit does not form part of your estate. If it formed part of your estate (by naming your estate the beneficiary) and if you had no other assets, the bank would be entitled to payment of the LOC from the death benefit. However, if the death benefit is payable to a third party and if you had no asets, the bank would have to write off your LOC as a bad (uncollectable) debt.

 

I don't that is the case for these policies which are specifically sold by the banks to cover that specific LOC debt. But I could be wrong.

[rmorelan]

I don't that is the case for these policies which are specifically sold by the banks to cover that specific LOC debt. But I could be wrong.

 

If not then they are make another minor mistake - if you go through the trouble of getting insurance then you should at least see what amount needed. Funeral costs would be an obvious extra to tag on (imagine you dying and your parents are also out say 10-15K - low ball numbers by the way - to bury you.)

 

Ahahaa - there is no way this is good practise