Home is not only where the heart is — it’s also the largest single debt for most Canadians.
But that’s OK, because your home is the centre of your family’s life. That’s why you should look long and hard at mortgage insurance.
Traditional mortgage insurance can be conveniently obtained from your lender as part of your overall mortgage "package." The premium is added to your monthly mortgage payment.
The policy has no cash value and the benefits are paid directly to the lender.
Your lender owns the policy. If you decide to change your lending institution to get a better mortgage rate or move to a new home, you have to requalify medically for new protection, potentially at higher premiums.
Tour coverage ends when the mortgage is paid off.
Although it is unlikely, the fact remains that the insurance company that underwrites the policy could change the rate structure or cancel coverage as a whole.
Personal life insurance is all yours.
You own the policy, and it insures you not the mortgage. You decide on the type of policy that’s best for you — either term or permanent insurance — and you choose the beneficiaries who can use the funds any way they wish — to pay off the mortgage, provide an income, or cover immediate expenses.
Your coverage isn’t reduced by a declining mortgage balance, so your beneficiaries stay protected. Any benefit payout in excess of the amount owing on the mortgage is available for use by your beneficiary.
If you choose term insurance, you can convert it to permanent insurance at a time suitable to you.
Your coverage goes everywhere with you — from home to home, mortgage to mortgage — and you can reduce the amount of coverage any time you want.
It’s your plan — with the options, features and premiums that fit your needs and budget.
And you can add disability and critical illness insurance that can include the benefit of waiving your premiums should you become disabled, providing the money to continue making mortgage payments, or paying your medical expenses.
Your home is your family’s protective nest — it makes sense to protect it (and your family) with mortgage insurance.
Your professional adviser can help you get the right protection that blends with your overall financial life.
J. Kevin Dobbelsteyn is a certified financial planner with Investors Group Financial Services Inc. His column appears every Wednesday.