Now that you’ve bought a house and arranged mortgage financing, the next step is to get approved for mortgage life insurance. There are many insurance companies available to add this type of insurance to your mortgage but the products are not all created equally. Choosing the wrong coverage can cost a lot of money in the long run and get you less insurance than you could have had.
Why do you need insurance? If you have a family and children, then you have a major reason to get mortgage life insurance. Death can happen at anytime due to accidents, natural causes, etc. Your mortgage is the biggest debt and financial burden to your family. If a husband or wife is to pass away, the income lost can cause substantial stress to the remaining borrower and sometimes a sale of the house will be necessary as payments and housing costs become too expensive. To avoid this, mortgage life insurance can pay off the remaining mortgage balance or even pay more than the remaining balance, such as an insurance payment equalling the original starting mortgage balance.
The Positives About Mortgage Life Insurance
- It’s easier to qualify for than most other life insurance products as no medical exam is usually necessary
- Coverage can start as soon as the application is made
- It can be cancelled anytime if you change your mind and there is typically no penalty or costs
- With Insurance that mortgage brokers use, the products are usually better than bank offered products as coverage is larger and fees are less. For example, the insurance product can payout the original mortgage balance instead of the actual balance at the time of death. Products like this are available through insurers such as Canada Life.
- Your mortgage broker can setup the insurance policy while doing your mortgage application, so no additional appointments are necessary
The Negatives About Mortgage Life Insurance
- It’s usually more expensive than term life insurance , which is another popular product these days
- Some products will only payout the remaining balance on the mortgage instead of a set amount like term insurance
- If you have a medical issue like high blood pressure, etc. , you could be declined
Talk to your mortgage broker about your insurance options and see what products are available through them. Compare the costs and features with other life insurance products like Term, Universal and Whole Life Insurance products. No matter what you do, keep your family in mind and protect them from financial burdens later on in life. Try to apply for some sort of protection so you can have peace of mind while carrying your mortgage over the years.