Do I need mortgage insurance? Get the answers to your questions and more.
If you are buying a house, you’re probably thinking, “do I need mortgage insurance?” A house is likely the biggest purchase you will ever make, so you need to make sure you are covered in case you aren’t able to make payments. Mortgage insurance is one of your options.
There is a lot of information out there saying you don’t need it and the decision to purchase coverage is totally up to you. To help you make an informed decision, we answer some of the basic questions many people have regarding mortgage protection insurance such as:
- What is mortgage insurance?
- How does it work?
- What if I have coverage through work?
- How much am I covered for?
- How do payments work?
- Can I change my mind?
By the end of this, we hope to help you figure out if mortgage insurance is right for you. If you have any questions, don’t hesitate to reach out.
What is mortgage insurance?
To put it simply, mortgage insurance is a product that pays for your mortgage if you are sick or die.
How does it work?
The amount you pay for your coverage is dependent on the amount of your mortgage. Mortgage payment protection comes directly out of your chequing or savings account around the middle of each month.
If you need to make a claim, unlike life insurance, mortgage insurance payments go directly to the financial institution to cover your payments.
What if I already have insurance through work?
That’s great! However, knowing exactly what your other insurance will and will not cover is very important. It could mean a big difference in what you would receive in monthly income, or what your family may receive in a lump sum payment to cover living expenses, and loan or mortgage payments.
With most other life and disability insurance, if something were to happen to you, you (or your family) would receive a lump sum from the insurance company to cover all of your expenses. In comparison, with mortgage protection insurance your payments are taken care of if something were to happen. This eliminates the additional expense of your mortgage and frees up your work income coverage for other expenses.
What am I covered for and for how much?
With mortgage payment protection insurance both life and disability coverage are available. Life protection will cover a maximum of $500,000 for a mortgage, level term, or outstanding balance. Disability insurance will cover up to $3,000 per month for up to 24 months.
Am I eligible?
For mortgages, members 18 – 65 are eligible. You may need to meet additional criteria in order to be eligible but we will go over all of that during the application.
Can I change my mind after I’ve already enrolled?
Payment protection insurance is available with a 30 day right to examine, meaning you can choose to opt out within the first 30 days and receive a full refund on any premiums paid. You can cancel your insurance coverage at any time with a written request.