Mortgage Insurance

How does mortgage insurance work?

Bank mortgage insurance is added to your mortgage payment. The coverage decreases as you pay down the mortgage, but the premium usually does not. Health questions may be reviewed in detail only when a claim is made, and the coverage usually ends if you switch lenders.

Personal term life insurance is reviewed and approved before it starts, so you know you are covered. The coverage stays level for the term, your family receives the money, and the policy stays with you if you move or change lenders.

For both, the price depends on your age, health, smoking status, the amount of coverage and the term.

Benefits of personal mortgage protection

• Your family receives the money and decides how to use it: the mortgage, bills, child care or education
• Level coverage that does not shrink as you pay down the mortgage
• Stays with you if you renew with another lender or move
• You can add critical illness or disability coverage to help keep up payments if you get sick or hurt

When a policyholder dies, the family notifies the insurer. With bank mortgage insurance, the benefit is paid to the lender; with personal term insurance, it is paid to the beneficiaries you named.

How much coverage do you need?

Start with your mortgage balance and the years left on your amortization, then add other debts and the income your family would need. Many families choose a 20 or 25-year term to match the mortgage. Premiums for mortgage life insurance on your own home are generally not tax-deductible.

Compare mortgage protection quotes from 20+ Canadian insurers online, or call 1-855-500-5041. Help in English, Hindi and Punjabi at 912 Isaiah Pl, Kitchener, Monday to Saturday, 9 a.m. to 9 p.m.

What is mortgage insurance?

Mortgage life insurance pays off or pays down your mortgage if you die, so your family can stay in the home. There are two main ways to get it:

• Lender (bank) mortgage insurance: offered when you sign your mortgage. The coverage goes down as your balance goes down, and the benefit is paid to the lender.
• Personal term life insurance sized to your mortgage: you own the policy, the coverage stays level, and the benefit is paid to the people you name.

Mortgage life insurance is different from mortgage default insurance (CMHC, Sagen or Canada Guaranty), which federally regulated lenders require when your down payment is under 20%. Default insurance protects the lender, not your family.