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What is Mortgage Life Insurance?
Essentially, life insurance for your specific mortgage is a form of insurance specifically designed to protect you and your co-signers’ (if applicable, a good example of this would be a spouse) form of repayment. For example, if the policyholder (or one of such) were to pass away, the outstanding balance of said mortgage would be paid off in full (depending on what insurance the holder(s) were to go with). The value of the insurance coverage must equal the capital outstanding on the repayment mortgage and the policy’s termination date must be the same as the date scheduled for the final payment on the repayment mortgage. Mortgage life insurance is highly recommended to relieve stress on a cosigner if such a situation were to arise. There are also several types of Mortgage protection worth looking into.
Do You Have To Have Life Insurance With a Mortgage?
Realistically, it is not mandatory to have life insurance with a mortgage. However, if you are one of the 57% of homeowners with an outstanding mortgage to pay off, it’s highly recommended, think of it as a form of life insurance; you don’t need it, until you need it.
Mortgage Disability Insurance
By definition, mortgage disability insurance is: “A disability insurance policy which will pay the monthly mortgage payment in the event of a covered disability of an insured borrower for a specified period of time.” Now, what does this really mean? Let’s say you were involved in an accident of some sort or fall seriously ill and were unable to return to work of any type or form. Different banks have different rates, however the main idea is that the signer or co-signer who decided to go with mortgage disability insurance would have determined their plan as well as extent of coverage when they initially set up their insurance plan. When choosing an insurance plan, a common factor that seems to deter a lot of people from having insurance is the illusion and common belief that “this will never happen to me” or “what are the odds of this happening?” Below are a small series of graphs that depict a fairly good idea of what exactly the odds are of this happening to you (of course there are a lot of factors not shown in the graphs, these numbers would fluctuate depending on your personal lifestyle).
Long Term disability Insurance benefits
● Easily accessible. If you are between 18 and 65, working and have no serious health conditions that you are currently aware of and are a Canadian citizen; the odds of getting accepted are highly in your favour.
● Workers comp only covers work related accidents, where mortgage disability insurance will cover any disability or illness that keeps you from making an income.
● Unemployment insurance will only cover 15 weeks.