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Choose the best option for you
Many Canadians seek to minimize financial hardship for their families with mortgage insurance. The fact is, buying a home is probably the biggest financial decision you'll ever have to make. Assuming you use a mortgage to finance your home, it just makes good sense to ensure your investment is adequately protected through an insurance plan, one that will pay off your mortgage should anything happen to you. You wouldn't want to leave your spouse or children with a mortgage they might not be able to afford.
But there is more than one option for insuring your mortgage. Many people are unaware that their lending institution is not the only source for this kind of protection and that better choices may exist... ones with lower cost and greater flexibility. So it makes sense to do some shopping and comparing.
Do I have to buy mortgage insurance from my lender?
No. Your mortgage lender will usually offer you mortgage insurance to cover the balance owing, if you should die before the mortgage is paid off. But, you may also choose to buy insurance directly from your life insurance provider instead, and this is often your least costly option.
It's worthwhile comparing the costs and benefits of mortgage insurance to ensure you get the value and flexibility you need. The following table compares the two options for insuring your mortgage and show how acquiring protection from your life insurance provider is an excellent choice:
| Comparing: | Life Insurance Co. | Mortgage Lender |
|---|---|---|
| Type Insurance | Term or permanent | Beneficiary-Anyone |
| Anyone decide | Your mortgage lender | |
| How Insurance is Used | Beneficiaries decide | Pays off the mortgage |
| Payment Frequency | Monthly, quarterly, semi-annually, or annually | With your mortgage payment |
| Other Life Insurance Needs | You can take care of all your other insurance needs with one policy | You can cover only the mortgage |
| Continuing Coverage | You're either covered until age 80 or you can eligible any eligivle permanent or universal life policy | Your insurance ends with your policy |
| Portability | Your insurance stays with you even if you refinance or change lenders | If you move your mortgage, your insurance ends and you have to re-qualify with the new lender |
| Insurance Benefit | You can get a level of benefit, or you can lower your benefit over time to match your mortgage | Decreasing with the amount borrowed |
| Advice | You deal with a licensed life insurance advisor who can help determine the type and amount of coverage that's best for you | Your mortgage lender may not be licensed and may not be able to provide advice on life insurance |
| Premium Guarantees | Your premiums are guaranteed, as are future renewals | Premiums are not guaranteed (although they rarely change) |
| Length of Premiums | Vary depending on plan chosen | As long as mortgage is payable |
| Male and Female Rates | Your premium is based on gender, smoking status, health and lifestyle factors | Same rates for men and women |
| Provincial Sales Tax | None | Subject to tax in Quebec and Ontario |
| Options and Riders | You can customize your coverage with Waiver of Premium, Accidental Indemnity and Children's Insurance riders | None usually available |
| Non-smoking and healthy lifestyle discounts | Yes | No |
What can Horizon Planning Group offer for my mortgage insurance needs?
Horizon is ideal for looking after your mortgage. Our term insurance plans offer low rates for five, ten, and twenty year coverage and is fully renewable, meaning we guarantee you can extend your policy when the term ends, up to age 80 with no medical evidence required. Horizon plans also feature conversion options, allowing you to change your plan to a different type of insurance (this might be useful if you pay off your mortgage and wish to continue your insurance coverage through a plan such as universal life). Flexible payment choices as well as the ability to increase or decrease coverage ensures that your changing needs will be met.
Should I choose single or joint-first-to-die coverage?
Single coverage insures one person. Joint-first-to-die coverage insures two people, but pays a benefit on the first death only. Joint coverage may be an ideal choice for couples, since one policy insures both husband and wife, which saves money over having separate policies.
Your mortgage lender's joint coverage is very different from the joint coverage you buy directly from an insurance company. With the lender's coverage, the mortgage is paid off on the first death and the insurance coverage ends.
With joint-first-to-die coverage from Horizon, an insurance benefit first to the beneficiary on the first death. Because the proceeds are paid to a named beneficiary, they decide how the insurance proceeds are used. For example, if the mortgage rate is low, it may be better to invest the death benefit rather than use it to pay off the mortgage.
Is mortgage insurance the same as an "insured mortgage"?
No. Mortgage insurance on your life is not the same as an "insured mortgage." An insured mortgage protects the mortgage lender in case you do not make your mortgage payments. This coverage is provided by CMHC (Canada Mortgage and Housing Corp) and is required if you have a "high-ratio" mortgage. (A mortgage is high-ratio if the amount borrowed is more than 75% of the purchase price or appraised value, whichever is less.)
The choice is yours
When you're ready to buy or re-finance a home, carefully review the options for insuring your mortgage. Remember, the decision is yours - so make the best choice for you. And consult an advisor for more information on Horizon's insurance plans for mortgage holders.