Understanding Mortgage Insurance in Canada:

Understanding Mortgage Insurance in Canada

When considering buying a dream home, many things will run through your mind. One such thing is how you’re going to pay for it. Saving for a house involves putting away your hard-earned money for years and making sacrifices along the way. You also need to be saving money so you can get it insured. Whether it’s your first mortgage, or you’re renewing, there is tremendous value in  purchasing insurance. It’s vital to ensure your mortgage is paid for should you or your significant other passes away and to make sure your family’s future is much more secure.   However, you’ve spent a lot of time looking for the right house or finding the best mortgage rate, so don’t rush the insurance decision. It could be a costly financial mistake.

Let’s look at two different ways to make sure your mortgage is paid after death and which of them is a smarter financial decision. We’re looking at mortgage insurance vs. personal life insurance.

What is mortgage insurance?

A financial institution such as a Bank sells mortgage insurance to pay off your mortgage in case of death. A mortgage lender will walk you through the paperwork; it’s simple and easy. There are some medical history questions, but no medical exams, and, if approved, it’s tacked on to your monthly mortgage payments.  Unfortunately, every term when you are renewing your mortgage, you will be required to go through the same process to determine medical eligibility for coverage! The premiums for every term are determined by your demographics and the balance of your mortgage. If you pay the insurance premiums for the duration of your term, your mortgage should be covered should you die.  

REMEMBER:  Your insurance is owned by the Lender – NOT YOU!

What is Personal Term Life Insurance?

Term life insurance is sold by a Life Insurance Broker such as Health Risk Services and covers you for a set period be it, 5, 20 or 30 years (or somewhere in between). The term you choose is important as it allows you to ensure that your mortgage will be covered for the full amortization of the mortgage rather than just a few years per term. This type of policy allows the Beneficiary to specify how much of the payout they wish to apply to the outstanding mortgage and how much they wish to apply to other to other potential financial disasters where your dependents may be significantly affected. For example, making sure your kids have enough money before they go to college and still need financial support.

There are medical questions, often medical testing, and a bevy of suppliers from which you can buy life insurance. But the good news is that once you are approved for the specified term, you will never have to experience medical eligibility again!  You can even change houses and mortgages and your insurance moves with you!! 

So, make sure to shop for life insurance quotes to get the best rate, as they can vary. The monthly premiums are based on your demographics and overall health, the benefit amount, and term length. You can use life insurance to pay off debts, your mortgage, or replace your salary. Ready to make sure your family will have the stability they need, when they need it most? 

REMEMBER:  You now own your insurance which has been personalized and tailored your own specific needs!

Not often do you hear the word “strategy” used when talking about mortgages and mortgage insurance.  This is why Health Risk is proud to be partnered with SmartCap Mortgage Professionals – to discuss your Mortgage needs, please contact Greg Miller directly. 

And of course, to discuss your Mortgage Insurance strategy, contact Luene La Fountaine at Health Risk Services!