Don't take your mortgage insurance with your lender!

Buying a property is often the most significant investment of our lives, and it typically involves a mortgage. Unfortunately, the death of one of the homeowners can sometimes force the family to move due to insufficient financial resources to continue paying the mortgage. To avoid this situation, you need to take out insurance. You then have two options: mortgage life insurance offered by your lender or individual life insurance.

The mortgage life insurance offered by your lender.

Also known as 'creditor insurance,' this protection is offered by the institution financing the purchase of your home. It's quick and easy to obtain. No need for a medical exam; you just have to answer a few questions before receiving a certificate stating that the financial institution will repay the balance of your mortgage if you pass away. Despite being easy to acquire, this insurance has several drawbacks.

Disadvantage #1: It is more expensive...

Indeed, your lender's insurance is more expensive than individual insurance, despite the fact that it decreases along with your mortgage payments.

Disadvantage #2: It does not belong to you!

The insurance is tied to your lender, so if you decide to switch financial institutions to take advantage of a lower interest rate during your renewal, you will have to take out a new mortgage life insurance. The premium will be more expensive as you have aged. In the worst case, insurance may be denied if your health has deteriorated.

Disadvantage #3: Easier at the beginning, but more complicated when needed...

Be aware that with your lender's insurance, medical checks are conducted after the death. With the estate settlement happening simultaneously, it becomes complicated and can bring a lot of anxiety to your family members during these difficult times.

In other words, this insurance serves to protect the interests of your lender and not yours. It's a quick and convenient option, but term individual life insurance is the right choice for its flexibility and better price.

Individual life insurance

Nothing but advantages!

Individual life insurance allows you to determine the coverage amount based on your specific needs. While it's essential to cover your mortgage debt, you have the flexibility to increase the insurance amount to also cover other debts if desired. Additionally, you get to designate your beneficiaries, and you alone decide the coverage duration, whether it should align with the entire duration of your mortgage or not.

With an individual life insurance policy in hand, you give yourself the option to change financial institutions and even keep the insurance if you change properties. Moreover, you won't have to worry about possible changes in your health status because the contracts are set in stone for the entire term duration.

In the event of death, beneficiaries of individual life insurance receive a lump-sum, tax-free benefit. This provides them with more freedom regarding its use. On the other hand, mortgage insurance with your lender directly pays off the remaining loan balance to the bank.

However, medical checks are conducted at the time of purchasing life insurance. This approach ensures that the insurer will release the funds quickly in case of unforeseen events. Typically, depending on the chosen coverage amount and your age, you can expect to answer a slightly more detailed health questionnaire.

In short, individual insurance is by far the best option to cover your mortgage debt in case of death.

The Clario Advantage

At this moment, Clario comes into play! With us, compare all insurers in a few clicks and get the best price for your mortgage life insurance. You can also schedule an appointment with one of our specialists who will assist you with your application and provide advice on the best options.

Clario is the only life insurance broker in Quebec specializing in mortgage insurance. In recent years, we have developed technology that allows us to compare all insurers in a matter of seconds. Our process is fast, simple, and human from start to obtaining your insurance.