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Optional mortgage insurance products are life, illness and disability insurance products that can help make mortgage payments, or can help pay off the remainder owing on your mortgage, if you:
- lose your job
- become injured or disabled
- become critically ill
- die
Optional mortgage insurance is a type of credit and loan insurance that you’re usually offered when you take out or renew a mortgage. You don’t need to purchase optional mortgage insurance to be approved for a mortgage.
The lender cannot insist that you buy mortgage insurance. You must give your express consent to obtain this product.
Mortgage life insurance
Mortgage life insurance is an optional product that may pay the balance on your mortgage to the lender upon your death. This product is optional. It can be useful if you have dependents or a spouse who might like to stay in your home after your death, but who might not be able to continue making the same mortgage payments as before.
Before you buy mortgage life insurance, check if you already have insurance coverage that meets your needs through your employer or another policy.
Keep in mind that your home can be sold to pay back the mortgage, so mortgage life insurance may not be necessary for you.
How much mortgage life insurance costs
You pay a fee called a premium, based on the amount of your mortgage and your age. Premiums are usually added to your regular mortgage payments.
As you pay down your mortgage, the premiums generally remain the same, even though you’ll owe less on your mortgage over time.
Where to get mortgage life insurance
You can buy mortgage life insurance through your mortgage lender, or through another insurance company or financial institution. Shop around to make sure you’re getting the best insurance to meet your needs.
Your lender can’t force you to buy a product or service as a condition for getting another product or service from them. This is called coercive tied selling.
Mortgage life insurance vs term or permanent life insurance
As you pay down your mortgage, mortgage life insurance covers a smaller amount of money.
Term or permanent life insurance may provide better value than mortgage life insurance. With term or permanent life insurance, the death benefit, or amount payable to your beneficiaries, won’t decrease over the term of the policy. Upon your death, your beneficiaries may use the insurance money to pay for the mortgage.
Mortgage disability and critical illness insurance
Mortgage disability and critical illness insurance may make mortgage payments to your lender if you can’t work due to a severe injury or illness.
Mortgage disability and critical illness insurance is usually a combination of several insurance products, including:
- critical illness insurance
- disability insurance
- job loss insurance
- life insurance
Most insurance plans have a number of conditions attached to them, including a specific list of illnesses or injuries that are covered or excluded. Pre-existing medical conditions are usually not covered. These terms and conditions of insurance are listed in the insurance certificate. Ask to see the insurance certificate before you apply, so you understand what the insurance covers.
Before you buy mortgage disability or critical illness insurance, check if you already have insurance coverage that meets your needs through your employer or another policy.
How much mortgage disability and critical illness mortgage insurance costs
You will pay a fee called a premium based on the amount of your mortgage and your age. You pay this premium monthly for the term of your mortgage.
Where to buy mortgage disability and critical illness mortgage insurance
You can buy mortgage disability and critical illness insurance through your mortgage lender, or through another insurance company or financial institution. Shop around to make sure you’re getting the best insurance to meet your needs.
Your lender can’t force you to buy a product or service as a condition for getting another product or service from them. This is called coercive tied selling.
