st_title = 'Mortgage loan insurance: what you need to know before signing'
Just when signing for your mortgage
Choosing a property is not an easy choice! You have no doubt previously defined what suited you best: the size, with or without a garage, the number of rooms, the style, the neighbors, the repairs … Furthermore, you know that buying a property represents a important financial decision and that it makes perfect sense to protect this investment which is one of the most important in your life.
When you sit at a Desjardins caisse or in a bank and the lady tells you that you are accepted, you become so delighted and for good reason. One of your important dreams has just come true and you are ready to sign with your eyes closed so you are happy! This is when the counselor tells you that you will definitely take out life and disability insurance. She presents you with a simple questionnaire such as: Are you in good health? Not sick? Etc. Etc. And voila since the mortgage insurance premium is added as a percentage on your loan. It is for this reason that most people don't even know how much their mortgage insurance costs them. The interest rate is so inflated that you automatically extend the term of your mortgage repayment, that is, its amortization. And as if that were not enough, the premium, for example at Desjardins, is fixed for the duration of the term chosen. So if you signed for 5 years, your premium is fixed for 5 years and will increase thereafter. Which is totally different from a personal contract.
The only thing you want to hear at that time is how much is the refund per week, bi-weekly or monthly, including taxes. You also remember this:
- If I'm sick, the house pays for itself!
- If I die, the mortgage is paid!
Warning! However, it is not that simple.
For example, you should know that for disability insurance, the definition of disability changes after two years. Please ask your lending institution or read the definition carefully in the member guide or in the explanatory document which they must give you. Also, don't just make a phone call from the cashier or the bank. Ask for the answer by email.
What is the mortgage loan insurance offered with your mortgage?
According to the lady selling your mortgage to you, with mortgage loan insurance, “the mortgage is paid if you get sick or die” Yes! You’re more likely to fall to the ground if you think it’s so easy to claim.
First, be aware that in general, you have a 90-day waiting period for an illness or accident.
Total disability? For the first 24 months, following an illness or an accident, you must be in a state of continuous incapacity which prevents you from exercising the activities of your regular occupation and that you do not exercise any other gainful activity or which should being.
As of the 25th month and for the duration of the benefits, you must be in a state of continuous incapacity which prevents you from exercising any reasonable occupation and that you are not engaged in any other gainful activity or should be. In addition, to be considered totally disabled, you must be followed by a doctor as often as necessary for your condition during the period of your incapacity.
Regular occupation : refers to any job, job, occupation or profession from which you earned your income before the onset of your disability.
Any reasonable occupancy : means, regardless of the availability of such an occupation, any job, job, occupation or profession which is likely to provide you with an adequate income compared to that earned before your total disability and which you are able to occupy because experience, education, training or knowledge that you have or can reasonably acquire.
Have you ever wondered what could happen to you to be considered totally disabled, that is, to benefit from the protection offered by mortgage loan insurance?
- A broken leg? No insurance, plaster 30 days.
- A burn out? Ayoye! It takes a follow-up required by a psychiatrist and if it lasts, another follow-up by a psychiatrist that Desjardins or the bank has mandated for an expertise.
- A heart attack? Yes of course… with between 90 days or 120 days of rest, they won't pay long.
- Fatigue? Forget it after 90 days.
- Back pain? You are better off having never been treated for this and having declared it during the subscription because otherwise, you will fall from the top !!
So, do you pay?
Well yes, if you become paraplegic in a wheelchair, they are sure to pay. A stroke, they pay. They pay for a serious illness like cancer, but during treatment and when you become able to go about your regular activities again, it stops. If you go blind, they pay. If you fall in love, they don't pay 😉
Conclusion: Before saying to the lady from Desjardins or the bank “yes I take it”, take the time to shop elsewhere because, anyway, you will fall to the ground when you see the savings you will realize by comparing prices in mortgage insurance.
Shopping for mortgage insurance is not necessarily a pleasure, but if you have a sense of responsibility, you will not only save thousands of dollars over 20 or 25 years, but also be convinced that in the event of a major disability. or death, verifying the information you have provided will not result in being told that you are not covered!
Never forget this:
Mortgage loan insurance like those offered by some lending institutions does not fully verify your insurability that during a complaint. No one wants to hear that your complaint is denied because you failed to provide certain information. Remember that the less questions you are asked when subscribing, the more likely you are to have overlooked certain critical information. It is for this reason, among other things, that people prefer personal insurance.
The advantages of taking out an individual contract
- It is less expensive!
- You will get individual mortgage loan insurance including You're the owner unlike collective protection as offered by most financial institutions;
- A protection against rising interest rates since the premiums are uniform and guaranteed for the entire term.
- The choice of individual or joint life insurance protection depending on your personal situation, which allows you to benefit from a significant premium reduction;
- The privilege to transform your mortgage loan insurance into regular life insurance without having to answer questions about your health;
- The possibility of designating a beneficiary other than your financial institution;
- The freedom for your heirs to use the benefits to repay your loan or to meet higher priority needs since the insurance benefit is paid to the beneficiary and not to your lending institution.
Here are the advantages of taking out a personal contract instead of mortgage insurance from the credit union or the banks:
- By purchasing mortgage insurance other than cash or the bank, you pay off your loan faster, because the cost of insurance is not added to your interest rate which represents thousands of dollars savings over the life of your loan.
- Verification of your health before the acceptance of the contract and not at the time of a claim thus avoiding a refusal of your claim
- You own your contract and name the beneficiaries of your choice, this insurance is not related to your mortgage
- Possibility to take out disability insurance only and choose the amount of benefit desired monthly which can cover all loans unlike mortgage insurance from the credit union or banks
- Possibility to subscribe to life insurance in the amount of your choice unlike mortgage insurance from the credit union or banks
- Life insurance that can be converted to permanent life insurance if necessary, without any medical evidence
- You can cancel your credit union or bank mortgage insurance at any time without penalty
If you are 65 and over, you will also be interested in discovering the advantages of using our premium comparator to take out mortgage loan insurance.
Click here to apply for mortgage insurance online.
Each financial institution offers mortgage insurance with different guarantees, prices, definitions and clauses. You are responsible for reading and writing the Membership Guide and all of its documentation, and most importantly, requesting a second opinion to help you understand it. You do not have to do business with the lending institution, whether it be Desjardins or a bank. You can do business with you for your insurance.
LifeAssurance.ca is not a life insurance company but a independent premium comparator allowing you to shop with recognized financial institutions. By remaining independent, we are not in a conflict of interest. Our mission is to offer you the best price and the best guarantee according to your request.
st_title = 'Mortgage loan insurance: what you need to know before signing'