Mortgage Life Insurance

November 2, 2020 | Editorial Team

Mortgage Life Insurance in Canada

As home prices in Canada have historically skyrocketed, the only way many of us can afford a home is by taking out a mortgage. A mortgage is a type of loan taken out to pay for your property or land. You then make payments towards the mortgage. Once it’s paid off, you own the property or land. But, what happens if you pass away before you finish paying it off?

That is why getting insurance on mortgage debt is possible. You can take out a mortgage life insurance policy that will ensure your mortgage is paid off if you die. Let’s take a deeper look into mortgage life insurance and how it compares to other policies.

What is Mortgage Life Insurance?

You have likely heard of a mortgage and life insurance as two separate things. But, have you heard of mortgage life insurance? Mortgage life insurance is a type of coverage you can purchase from an insurance or mortgage company. It is an insurance policy that willmake sure your mortgage is paidin the event of your death. People purchase mortgage life insurance so their families can stay in their homes. Otherwise, they would have to worry about mortgage payments.

Most Canadians require a mortgage to pay for their home. Applying for mortgage life insurance is thus typically done when applying for a mortgage. The financial institution you get your mortgage from can add-on mortgage life insurance to your mortgage payments.

As your mortgage life insurance is tied to your mortgage, once your mortgage is paid, your mortgage life insurance is finished. One of the biggest issues people have with mortgage insurance is that as your mortgage balance lowers, your insurance premiums do not.

Life insurance for mortgages is not legally required in Canada. Many Canadians don’t even know mortgage life insurance exists, let alone have it. So, you may be wondering what the benefit of such an insurance policy is. Keep reading to find out the benefits of mortgage life insurance and how it differs from a regular life insurance policy.

Do You Need Mortgage Life Insurance?

If you already have a mortgage and separate life insurance coverage, you may be wondering if you even need mortgage life insurance. As it is not a legal requirement for owning a home, you may not need mortgage life insurance. That being said, there are benefits to having the extra coverage.

Mortgage life insurance is very easy to get, especially compared to life insurance coverage. You don’t need to undergo a medical exam for mortgage life insurance. This makes obtaining it easier for those with pre-existing illnesses that a life insurance company may reject them for.

Mortgage life insurance is also a good supplement to your regular life insurance. Your life insurance may be used to cover other expenses. Then, your mortgage life insurance may be used solely to pay off the balance of your mortgage.

This may be where the positives end with mortgage life insurance. Mortgage life insurance premiums tend to be more expensive, and you end up losing money in the long run. This is mainly because your monthly mortgage life insurance payments will stay the same, even as you are making monthly payments.

Mortgage life insurance is also less flexible. In the event of your death, it can only be used to pay the mortgage.

Ultimately, mortgage life insurance can be a good idea if you have any pre-existing conditions. They may otherwise prohibit you from getting affordable life insurance. If not, simply purchasing higher life insurance coverage may be more beneficial.

Mortgage Insurance vs Life Insurance

Although we’ve been discussing mortgage life insurance, let’s compare it to term life insurance. Life insurance is a type of policy people purchase to ensure their loved ones receive money when they die. The person with the life insurance agrees to pay premiums over their lifetime in exchange for a lump sum of tax-free money for their loved ones.

When purchasing the life insurance, you pick a beneficiary that will receive the payment when you pass away. The money can then be used however the beneficiary chooses. It is typically used to pay off any debts, ongoing financial needs, and funeral costs.

The main difference between mortgage insurance and life insurance is how you can use them. Insurance for a mortgage can only be used towards mortgage payments. This ensures your home will be paid off, and your family can continue living there. The money received from life insurance, as we discussed, can be used for anything.

Another major difference is the length of coverage you get from each. Mortgage insurance ends when your mortgage is paid off. Life insurance only ends when you pass away. This means you and your family will be covered for your entire lifetime with life insurance. With mortgage insurance, you will only have coverage for the mortgage’s lifetime.

Obtaining mortgage insurance from a financial institution tends to be easier. You typically just apply for mortgage insurance as you are getting your mortgage. Life insurance, on the other hand, requires that you have a medical checkup and provide your medical history. This is how the financial institution determines what your premiums will be.

It can be a good idea to get mortgage insurance in addition to life insurance. But, it is not advised that you only get mortgage insurance. Mortgages insurance alone may not provide enough coverage for your family if you die.

Where To Get Term Life Insurance

RATESDOTCA

If you have decided that you simply want to get term life insurance, you now have to find a provider for your coverage. Contacting multiple financial institutions and insurance providers can be time-consuming and frustrating. What if there was an alternative? Good news, there is! RATESDOTCA is an insurance policy search engine. On it, users can find life insurance, mortgage, as well as coverage for a car, home, and travels.

Here are some pros and cons of using RATESDOTCA.

Pros

  • RATESDOTCA partners with over 50 insurance providers. This will help you find the best premiums and coverage possible.
  • The 50 insurance providers available are well-known and reliable. Some providers are Desjardins, The Co-Operators, BMO, Assumption Life and more.
  • It is a one-stop-shop for all your insurance and mortgage needs. Their search menu is extensive.
  • It is free to use RATESDOTCA, and you are not obligated to pick one of the policies they offer.
  • The application process is easy, as it is completely online. It can typically be completed in ten minutes or less.
  • The website is also extremely easy to use and navigate. You don’t need to be tech-savvy!
  • RATESDOTCA will save you time as you can see all of your life insurance options in one place.
  • You can choose from standard life insurance to critical illness life insurance on RATESDOTCA.
  • Users can choose from single or joint coverage.
  • Amounts range from $50,000 to $2,000,000, depending on your needs.
  • The term lengths range as well from 10 years to 100.

Cons

  • Only Canadians in Ontario, Quebec, and Alberta can search for premiums on RATESDOTCA.
  • RATESDOTCA does not provide any insurance or mortgage themself. They are only a middleman between the customer and insurance providers.
  • You can only contact customer service through email or the phone. No live chat is available.

Summary

As RATESDOTCA is completely free to use, what’s stopping you? You can quickly and easily find the best insurance quotes in Canada, all at the click of a button. As you are not obligated to go with any insurance provider RATESDOTCA recommends, you can simply “shop around” until you’re satisfied.

Purchasing life insurance is a great way to ensure your loved ones will be protected, even when you’re gone. Head over to RATESDOTCA today to get a free, no-obligation quote so you can get some peace of mind.

The Bottom Line

Most Canadians have or have at least heard of a mortgage and life insurance. How many have heard of mortgage life insurance? Likely not many. It is not a popular type of policy as many people don’t see the value in it. If you have pre-existing conditions, your life insurance premiums will likely be high. Mortgage life insurance does not take into account your pre-existing conditions. So, in this scenario, purchasing coverage could be a good idea.

Similarly, if you want your family to have extra money that can go directly towards your house, mortgage insurance could be a good addition to your policy.

Otherwise, simply purchasing higher coverage with your life insurance should be enough coverage. Your family can then choose what to use the money for, rather than solely putting it towards the mortgage.

Using RATESDOTCA is one of the quickest and easiest ways to get multiple quotes at once. Head over there now for a free, no-obligation quote to ensure your family will always be protected.