Mortgage Life Insurance provides your family with piece-of-mind in the event of your untimely death. Whether expected or unexpected, your passing doesn’t have to put an extra burden on you family as your mortgage debt will be settled through your mortgage protection insurance policy.
What is Mortgage Protection Insurance?
Also commonly referred to as mortgage life insurance, this is a policy that pays off the principal balance of your outstanding mortgage in the event of your death. This balance is paid directly to the lender so that your family will have a home that is clear title. As your mortgage balance declines over time, the amount paid out through your Mortgage Life Insurance to the lender also declines proportionately when you buy from your bank. However if your Mortgage Insurance is through an Insurance Broker then the death benefit stays the same as the original (i.e. it doesn’t decline as you mortgage goes down.
Benefit of Buying Mortgage Insurance from Brokerage VS Banks
|Mortgage (life) Insurance with Insurance brokerage||Mortgage Insurance buy with Bank|
|Face Value of the Insured amount||No change to premium & face amount||Goes down as mortgage amount is paid off but premium stays the same|
|Premium||Generally 20- 40% less than bank|
|Underwriting||Done upfront when policy is written||Underwriting after death – if your answers were incorrect, claim will be declined|
|Renewal||You can pick 10 – 40 years term so premium is fixed for that term. It doesn’t renew every time your mortgage renews. So premium remains the same||Premium goes up every time you renew your mortgage|
|Future Insurability||Insured as long as you want. You can plan ahead & budget for long term too.||You may not qualify at mortgage renewal time if you have an illness.|
Do I Need Mortgage Protection Insurance?
According to a Statistics Canada report made available in 2011 entitled, The Distribution of Mortgage Debt in Canada, 57% of Canadians held $855 billion worth of mortgages on principal residences. Protecting investments of this size with Mortgage Life Insurance is not only prudent in the event of death, but also if a homeowner is diagnosed with a terminal illness.
If your terminal illness is expected only to last for a year, some insurers even offer an early payout to help ease the burden during what can be a very stressful period for your family.
How Much Does Mortgage Protection Insurance Cost?
The cost of Mortgage Life Insurance depends on a number of factors including the age at which you apply, and the initial amount of your mortgage. Premiums do not increase for the term of your mortgage, even as you age.
Once your mortgage Life Insurance has been approved, coverage begins immediately, even before your purchase closes and you take possession of your home.
If I Change Mortgage Providers Will My Mortgage Life Insurance Move With Me?
No, you would be required to re-apply for Mortgage Life Insurance based on your new vendor. You would also have to re-submit relevant information such as your age and the amount of your mortgage. This would also subject you to the new provider’s rates and your health.
If you have any further questions about mortgage protection insurance, or simply want more details about all aspects of a policy, contact your Huronia Insurance Group agent today at 1-866-955-8386. You can also send us an email or fill out our online contact form to reach one of our personal insurance brokers.