Buying a home is probably the biggest financial decision you’ll ever make. Assuming you use a mortgage to finance your home, it just makes good sense to ensure that your investment is adequately protected through an insurance plan, one that will pay off your mortgage should anything happen to you. You wouldn’t want to leave your spouse or children with a mortgage they might not be able to afford. But there is more than one option for insuring your mortgage. Many people are unaware that their lending institution is not the only source for this kind of protection and that better choices may exist… ones with lower cost and greater flexibility. Your mortgage lender will usually offer you mortgage insurance to cover the balance owing, if you should die before the mortgage is paid off. But, you may also choose to buy insurance directly from your life insurance provider instead, and this is often your least costly option. It’s worthwhile comparing the costs and benefits of mortgage insurance to ensure you get the value and flexibility you need.
Do I have to buy mortgage insurance from my lender?
No. Your mortgage lender will usually offer you mortgage insurance to cover the balance owing, if you should die before the mortgage is paid off. But, you may also choose to buy insurance directly from your life insurance provider instead, and this is often your least costly option. It’s worthwhile comparing the costs and benefits of mortgage insurance to ensure you get the value and flexibility you need. Take a look at the differences and compare the two options for insuring your mortgage.
What can The President’s Group offer for my mortgage insurance needs?
We offer various term policies that are ideal for looking after your mortgage. The term insurance plans offer low rates for 10 and 20 years of coverage, and are fully renewable, meaning you are guaranteed that you can extend your policy when the term ends, up to age 80 with no medical evidence required. These plans also feature a conversion option, allowing you to change your plan to a different type of insurance (this might be useful if you pay off your mortgage and wish to continue your insurance coverage through a plan such as universal life). Flexible payment choices as well as the ability to increase or decrease coverage ensures that your changing needs will be met by our various plans.
Should I choose single or joint-first-to-die coverage?
Single coverage insures one person. Joint-first-to-die coverage insures two people, but pays a benefit on the first death only. Joint coverage may be an ideal choice for couples, since one policy insures both husband and wife, which saves money over having separate policies. Your mortgage lender’s joint coverage is very different from the joint coverage you buy directly from an insurance company. With the lender’s coverage, the mortgage is paid off on the first death and the insurance coverage ends. With joint-first-to-die coverage offered through the President’s Group, an insurance benefit is paid to the beneficiary on the first death. Because the proceeds are paid to a named beneficiary, they decide how the insurance proceeds are used. For example, if the mortgage rate is low, it may be better to invest the death benefit rather than use it to payoff the mortgage.
Is mortgage insurance the same as an “insured mortgage?”
No, mortgage insurance on your life is not the same as an “insured mortgage.” An insured mortgage protects the mortgage lender in case you do not make your mortgage payments. This coverage is provided by CMHC (Canada Mortgage and Housing Corporation) and is required if you have a “high-ratio” mortgage. (A mortgage is high-ratio if the amount borrowed is more that 75% of the purchase price or appraised value, whichever is less.)
When you’re ready to buy or re-finance a home, carefully review the options for insuring your mortgage. Remember, the decision is yours – so make the decision that’s best for you.