Mortgage Protection Insurance
Homeowner’s insurance is not the same as mortgage insurance
Homeowner’s insurance, also known as property or home insurance, helps protect your home from physical threats like fire, water damage, accidents, and loss of property from theft. It’s required when you have a mortgage.
Mortgage protection insurance helps cover your mortgage payments if you become seriously ill or die unexpectedly.
Types of mortgage protection insurance:
Choosing both term life insurance and critical illness insurance together gives you and your family the right protection when you need it most. Adding disability insurance gives you the most complete protection possible.
What is critical illness insurance?
If you become seriously ill, you’ll receive a lump-sum payment to spend as you choose, on things like medical expenses and mortgage payments so you can focus on recovery.
Term life insurance
Gives you affordable, flexible protection that your loved ones could use to pay off your mortgage or cover other expenses if you die unexpectedly.
What is disability insurance?
Disability insurance is designed to provide an income if you sustain a serious illness or injury.
Most people define disability as a physical or workplace related accident, the reality is that less than 10% of disabilities are caused by accidents. Yet, mental illness, cancer, cardiovascular diseases, and musculoskeletal diseases such as arthritis cause more disabilities than accidents.
Difference between mortgage insurance purchased from the mortgage lender and a standalone life insurance or critical illness policy
Who owns the insurance?
Mortgage insurance through the lender
Typically owned by the lender. The lender may control what happens to your coverage.
Standalone policies
Owned by you. You control what happens to your coverage.
Can my coverage be canceled by someone other than myself?
Mortgage insurance through the lender
Yes. Your policy may be canceled by the lender or issuing company. Often, coverage ends with the expiry/cancellation of the mortgage.
Standalone policies
No. Although your coverage offers mortgage protection it is not tied to a specific mortgage or need. When your mortgage is finished your coverage may remain in force, except in the event of non-payment of your life insurance premiums.
Who’s covered?
Mortgage insurance through the lender
Only the individual(s) listed on the mortgage.
Standalone policies
You and anyone you choose to insure.
Who gets a payout in case I pass away or become seriously ill?
Mortgage insurance through the lender
The lender is the beneficiary.
Standalone policies
Whoever you designate as beneficiary.
You can also change your beneficiary if and when you need to.
Does the death benefit decrease with my mortgage balance?
Mortgage insurance through the lender
Yes. Also, when there’s no more mortgage balance to insure, the coverage ends.
Standalone policies
No. The death benefit remains unchanged as long as the policy remains in force and you don’t change it.
Is the coverage portable?
Mortgage insurance through the lender
The coverage is usually tied to the mortgage.
Your insurance may end when the mortgage is repaid, assumed, canceled, the house is sold or the group policy terminates.
Standalone policies
Yes. The coverage will follow you and you can use it to cover another mortgage, if desired or for another purpose.
Can I apply for more coverage than the mortgage amount?
Mortgage insurance through the lender
Amount of benefit may only be for the amount of the mortgage.
Standalone policies
Yes. Coverage can be higher than the amount of the mortgage to cover other needs.
Is it possible to make changes to my coverage?
Mortgage insurance through the lender
No
Standalone policies
Yes. You own the policies, so you can make any contractually allowed adjustments, exchanges and conversions.
Note: The terms of coverage offered by specific creditors may vary. Ask your lender for more information.
Insurance Calculator
Do you know how much insurance you really need? The answer might surprise you. My Insurance View from ivari can show you how much protection you really need, today and into the future. Click here to give it a try!