For many Canadians the single biggest financial purchase they will ever make is for their home. Protecting that investment means more than fire insurance and burglary alarm; it also means protecting your mortgage. Mortgage insurance does exactly this. It ensures that if you are unable to pay your mortgage due to critical illness, disability or even death, that your home is protected for your family.
Many mortgage lenders offer this type of insurance and it can be a cost effective way to protect this large investment. It is calculated into your monthly payments and is usually dependent of your age and the amount you borrow.
Is it a Good Idea?
Mortgage life insurance isn’t always the best choice. If you have no life insurance, it may make more sense to instead apply for a term life coverage. With mortgage life insurance, your death benefit is simply equal to the amount of your mortgage. You have no option to spend the money on more pressing debts which cuts down your options. Term life insurance never decreases your death benefit. With term policies that are equal to the length of the majority of mortgages, plus the flexibility to use the death benefit in different ways gives it a clear advantage. Plus, most prices are equal so you actually get the same coverage even as you pay off your mortgage.
For people who already have whole life insurance, mortgage life insurance may be a smart way to cover an additional mortgage. But, even then opting instead to invest in term life insurance can actually give you many more advantages. The important thing is to speak with a financial advisor before making your decision.
The Next Step
If you have just purchased a home, or are thinking of taking out a mortgage it is important to speak with a professional financial advisor about your options. Since mortgage life insurance is usually offered solely by lenders, their motivation may be clouded by commissions and bonuses. An independent insurance advisor works with multiple insurance companies, and therefore has more of a focus on your needs.
LifeCover.ca can help connect you with an independent insurance advisor in your area. Speak with a professional in your area today and see firsthand how we’re saving Canadians time and money when it comes to insurance shopping.