Mortgage insurance helps safeguard your most important asset
Canadians love being homeowners. According to Statistics Canada, two-thirds of us own the places we live in, and we spend close to 30 per cent of the family budget on our mortgage or rent, and on home repairs.
But while home ownership is important to most Canadians, many don’t have a plan to keep their homes if the wage earners in their households become sick or die.
Even for those with life and disability insurance, the coverage often falls short of their families’ financial needs.
A lot of people have life and disability insurance through work, and they think they’re good, they’re covered.
But when they actually sit down and figure out how much coverage they have and how much money they’ll actually need, they quickly realize their coverage is quite inadequate.
For most Canadians, home ownership represents the biggest financial investment and most significant debt of their lifetimes. In fact, Statistics Canada reports that mortgages account for two-thirds of Canadians’ total household debt.
It’s important for homeowners to make sure that if they fall seriously ill or pass away, their families can pay down their mortgages or continue making monthly payments, while having enough to cover day-to-day living expenses and long-term costs, such as university education for their kids.
One way to do this is to invest in insurance that specifically protects homeowners. Known as mortgage insurance or mortgage protection, this can be purchased as a life, disability or critical illness policy.
Mortgage life insurance pays off the mortgage in one lump sum if the insured person passes away, while disability insurance covers monthly mortgage payments up to a certain period when the policyholder becomes unable to work because of injury or illness.
Critical illness mortgage insurance typically covers the entire amount owing on a mortgage following the diagnosis of a disease that’s covered by the policy.
A tremendous number of people who have been injured and been able to keep their home while they’re on disability, because they had mortgage disability insurance. There are also people who lost their partner-and, consequently, half their income - and their mortgages were paid off.
Some people prefer to bump up their regular life, disability or critical illness policies to also cover the mortgage. An advantage of having specific mortgage insurance is that the premium and coverage are tied to the balance owing, making it possible to allocate savings and payouts from other insurance policies toward other expenses.
Whichever approach homeowners choose, it’s important to have adequate coverage. I urge homeowners to buy insurance as early as possible.
First-time homebuyers won’t buy mortgage insurance because they feel they can’t afford it but remember insurance premium is based on age, so now is the time to buy
A number of customers who have been injured and been able to keep their home while they're on disability, because they had mortgage insurance.