Buying a home is a major investment. With Mortgage Insurance, protect your loved ones in the event of death, serious illness, or disability.
What Is Mortgage Insurance?
Mortgage insurance is term life insurance, the insured amount of which is based on the amount of the mortgage loan.
Even if it is not mandatory, mortgage insurance protects your loved ones and your spouse. If you die or are disabled, it is used to pay the mortgage loan and relieve your heirs of this financial burden.
Don’t Get Confused With Mortgage Loan Insurance
If the down payment for the purchase of your home is less than 20% of the purchase price, Canada Mortgage and Housing Corporation (CMHC) requires you to have mortgage loan insurance.
You then pay a premium to your financial institution, which protects itself against defaults.
In the event of death or disability, individual mortgage insurance will pay off your mortgage, not CMHC mortgage loan insurance.
Who Can Benefit From Mortgage Insurance?
Anyone with a mortgage, especially first-time buyers with a high mortgage amount, can benefit from mortgage insurance.
In fact, we are targeting people who would not be able to pay their mortgage in the event of a health problem or death.
Mortgage Insurance, Where to Get It?
During the negotiation of the loan for the purchase of your house, the bank or credit union will undoubtedly offer you mortgage insurance.
However, it is worth shopping around for mortgage insurance with the help of your financial security advisor.
With him, you can explore the advantages and disadvantages of taking out your mortgage insurance with a financial institution or an insurance company.
Note: This article is presented to you for informational purposes only. Under no circumstances should it be considered financial advice or legal or tax advice. For advice based on your personal situation, talk to your advisor.
Why Should You Use Term Insurance Instead Of Typical Mortgage Insurance?
With term insurance, by switching lenders, your mortgage protection remains the same.
On the contrary, in mortgage insurance through a lender, switching mortgage providers make you reapply for the mortgage insurance.
In term insurance, you own the policy and have the right to choose the beneficiary that can receive the death benefit.
But in typical mortgage insurance, the lender owns the policy and assigns himself as the beneficiary.
The coverage amount remains the same in term insurance even after the mortgage balance decreases.
On the other hand, typical mortgage insurance decreases as your mortgage balance declines, but the premium remains intact.
You can take advantage at the time of application from insurance underwritten in term insurance.
Typical mortgage insurance can only be underwritten at the time of death.
Guaranteed Death Benefit and Premium
In term insurance, the rates are guaranteed for the entire life of the policy.
But the rates are not guaranteed in typical mortgage insurance.
Visit the Safe Haven Financial website for all the information related to life insurance and investments. We are based out of London, Ontario, and provide the best insurance products like term life insurance, Critical illness Insurance, whole life insurance, disability insurance, travel insurance, and many more for clients all over Ontario.