Mortgage Life Insurance and Disability Insurance: What Are They?

Imagine this: You’ve bought a property and now have to pay the mortgage every month. But what if you can’t work because of an accident or illness? Your mortgage payments still need to be made. In such situations, mortgage life insurance and disability insurance can help. These insurance options protect your family’s income in case of unexpected accidents or illness that prevent you from earning a living.

What Are Mortgage Life Insurance and Disability Insurance, and How Do They Help?

It’s a terrible feeling when you can’t work due to illness or an accident. For some people, this situation can last for months or even years, leaving them without an income source. But don’t worry! You can support yourself financially during these difficult times by purchasing mortgage life insurance, mortgage disability insurance, or critical illness insurance.

What Is Mortgage Life Insurance?

Mortgage life insurance is usually a requirement when purchasing critical illness insurance or mortgage disability insurance in Canada. However, depending on your financial or personal situation, you can choose to buy only mortgage life insurance. Consider your needs carefully before making a decision.

What Is Mortgage Disability Insurance?

Disability insurance provides income protection if you’re unable to work due to unexpected accidents or illness. It covers a portion of your regular income (around 60% to 85%) for a specific period, allowing you to make mortgage payments as well as cover rent, medical expenses, and even food. It’s no surprise that around 50% of Canadians have disability insurance, as revealed by a recent RBC insurance survey.

What Is Critical Illness Insurance?

Similar to mortgage disability insurance, critical illness insurance offers a lump sum payment to cover your mortgage, rent, medical expenses, and other essential needs. It provides financial protection during critical illnesses, such as receiving treatment away from your hometown or requiring expensive medications.

Difference Between Mortgage Disability Insurance and Mortgage Loan Insurance

Many people get confused between these two terms and think they’re the same. However, mortgage loan insurance, provided by the Canada Mortgage and Housing Corporation (CMHC), and mortgage disability insurance are different. CMHC insurance protects the lender, not you, from unexpected events like accidents or illness. On the other hand, disability insurance protects you from income loss due to illness or accidents, making it easier to pay your mortgage. That’s why it’s also known as mortgage protection insurance.

Is Mortgage Insurance Necessary for Canadian Mortgages?

It’s not mandatory to buy mortgage insurance, including mortgage disability insurance, mortgage life insurance, or critical illness insurance, when getting a mortgage for property or other reasons, unless you’re facing specific situations:

  • You depend on your regular income to make mortgage payments.
  • You want mortgage coverage in case of sickness or accidents.
  • Your savings and investments are insufficient to pay off the mortgage if unexpected accidents or illness prevent you from working.
In Conclusion

If you’re looking for affordable mortgage life insurance or disability insurance in Canada, is here to help. Our insurance advisors can assist you in choosing the right coverage plan at a premium cost that fits your budget. Contact us now for a free consultation or non-obligation discussion!

Contact us now for a FREE consultation or non-obligation discussion!

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