Mortgage insurance: Are you really protected?
There's nothing more exciting than signing the dotted line on your first mortgage. You’re a proud home owner now, with your ownership deed and a lighter wallet as proof. And if you're like most Canadians, your home will be at the centre of your family and social life. So now that you've settled all the related fees, expenses, legalities and the like, have you given any thought about how your family would manage the mortgage payments if something happened to you? Orlando Ali Sr. our managing director with Desjardins Financial Security Independent Network, suggests that mortgage insurance is the best solution.
"Given that your home is your most important investment, it makes sense to keep it secure for your family," explains Mr. Ali, "The challenge is that many Canadians aren't familiar with how mortgage insurance works or the full extent of its coverage. And this often leaves many vulnerable."
According to Ali, home-buyers first hear about mortgage insurance from their lender during the mortgage application process. It's often presented as an easy-to-approve and affordable solution designed to pay off the debt in case of death, allowing your family to remain in your home. Unfortunately, this isn't always the case.
"The problem is that lender employees are not employed as life insurance agents and may not be trained to determine if you are actually qualified for mortgage insurance at the time of your application. They tend to decide this after a claim has been made through a process called post-claim underwriting," says Mr. Ali "If the lender finds any discrepancies on your initial application, which may happen because their employees are not professional life insurance agents fully trained and experienced in all the medical and lifestyle questions, your claim could be denied. Your beneficiaries would then only receive a refund of your premiums, which is little comfort for a family who thought the mortgage would be paid off."
Orlando suggests that the best way to avoid this type of disappointment is to purchase mortgage insurance from a licensed life insurance representative. "All is not lost however if you purchased your policy from your lender," he says. "A short meeting with an insurance expert can ensure that you obtain the right coverage."
To learn more about mortgage insurance please contact us.
Orlando Ali Jr.
Director, Sales and Business Development
Desjardins Financial Security Independent Network