Consider who would continue to pay for your home should illness, injury, or death removes your ability to pay for the mortgage. Inability to make mortgage payments may lead to financial difficulty and the repossession of a home by a lender.
Losing a family member or dealing with a health crisis can be hard enough for a family, and the stress of potentially losing a home is an unnecessary burden to shelter on loved ones. Insuring your mortgage is an important step in ensuring the financial security of your family and your home for years to come.
Mortgage loan insurance is a form of insurance offered by your mortgage lender to make sure your mortgage will be paid for, either in part or in full, should something happen to you.
These policies protect your lender against your death or hospitalization, in order to provide for the continued solvency of the lender’s business. While protecting your mortgage is important, there are better, more flexible solutions that offer the same benefit for less.
Mortgage loan insurance is not tied just to the individual borrower, but to the particular home purchased, the value of the home, and the remaining balance on the loan. The primary function of mortgage loan insurance is to provide for the lender’s needs.
The value of your coverage decreases as your mortgage is paid down, which means that your insurance policy will decline in value over time, and end when your loan is paid off. For other needs, such as for credit, loans, education costs, and the daily needs of your family are not covered by mortgage loan insurance.
When you get insured independently of your mortgage lender, your policy is much more affordable. You retain full control over the terms and coverage amount you need for your particular financial situation. You have the freedom to choose what is protected, and how long you need protection.
You also have the ability to assign your insurance benefits to whomever you wish, and not just to your lender. Providing your family with an income replacement allows them to have more financial freedom and independence.
If you’re insured under a mortgage loan policy, your insurance coverage is tied to the terms of the loan and you would be unable to change providers, convert your policy, or adjust the terms of your policy.
When you get mortgage insurance coverage independently, you can adjust your insurance policy or convert within the limits of the policy. However, most importantly, you have the freedom to choose a policy from all the known Canadian insurers.