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Is Mortgage Insurance Mandatory?

Martin Hébert | September 23, 2019
When buying a home, there are several things to consider, such as the mortgage and the insurance that goes with it. As it is sometimes difficult to find your way through all the formalities that follow the acquisition of your home, we will try to enlighten you on the subject.

Mortgage insurance is intended for all homeowners and future homebuyers. First, there are two different types of mortgage insurance: mortgage life insurance (commonly called mortgage insurance) and mortgage loan insurance (commonly called mortgage default insurance). It is important to understand the characteristics of each of them and their particularities since they do not have the same functions.

What is the Difference?

Mortgage life insurance is not mandatory. Although it is not necessary to take out mortgage insurance, it is still important to understand what such a decision entails. However, if you want one, it will be very useful in the event of premature death. This insurance is responsible for covering your mortgage payments and thereby protecting your family from a derogatory financial situation.

Mortgage default insurance is not to be confused with mortgage insurance. They are two completely different fonts. Mortgage default insurance is mandatory coverage, for example, by the Canada Mortgage and Housing Corporation (CMHC) or other institutions, which you must pay to your institution if the amount of your down payment does not reach 20% of the price of the house. This is protection for lenders in the event of a mortgage default.

Why Choose to Buy from a Broker?

On another note, when you buy your home, your institution will offer you mortgage insurance, but you should know that it will most likely be more advantageous for you to buy mortgage insurance through a broker. In this way, the possibilities for payments, changes of beneficiary and benefits are more numerous and diversified. Please note, however, that by law, your institution cannot require you to subscribe with its institution.

Of course!  In the event of death, mortgage life insurance will allow you to pay the benefit to a beneficiary in lieu of your financial institution. In addition, in the event of a change of financial institution, keep your coverage without implication.

We can also help you in your search for a mortgage with our partners.

Do you want to insure your home properly? Ask one of our brokers for advice.

About the author
Martin Hébert

Martin is a Sales Manager - Life and Health Insurance • Financial Security Advisor • Group Insurance and Group Annuity Plans Advisor at Lussier Dale Parizeau.

Martin Hebert | Directeur de ventes | Assurance de personnes | Lussier Dale Parizeau
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