When you purchase a home, consider how you will protect your investment. Understanding the different types of insurance will save you money and provide you with the best protection. This is an insurance that is required by lending institutions and provided by CMHC or Genworth Canada for any buyer who does not have the full 25% down payment when purchasing a property. CMHC covers the new homebuyer for solvency. Essentially, they are guaranteeing the mortgage lender that if you default on your mortgage, they will compensate for any shortfalls that are experienced by the lender. This fee is usually between 0.5% and 2.75% of the cost of your mortgage. (i.e. $200,000 mortgage with a 5% down payment would cost $5,500.00. This would be added into the mortgage loan and would cost you about $32 per month for a 25 year mortgage). Most mortgage lenders insist on fire insurance coverage at least equal to the loan amount or the building value, whichever is less. You must also consider a homeowner’s policy that combines fire insurance on the building and it’s contents. You should also carry personal liability coverage, in case someone is injured on your property. Consult your general insurance agent/broker for professional advice on home insurance. Recently insurance companies have started to offer Job Loss Mortgage Insurance. This insurance covers the mortgage payments in the event that you involuntarily lose your job. Again, remember it is only your mortgage payments, not your income. When lenders refer to mortgage insurance, they are referring to life insurance/disability coverage. This is intended to protect your family/beneficiaries by paying off your outstanding mortgage in the event of your death. It is recommended to purchase private insurance to cover your mortgage for many reasons. Purchasing private life insurance to cover a quarter of a million dollar home is only $16.88 a month for a 30yr old N/S female.
Mortgage Insurance (from your mortgage provider) Mortgage Insurance (through a life insurance representative) you pay premiums on declining balance, no balance to cover other needs family/beneficiary receives full amount of insurance moving for a better % rate, must re-apply for insurance at higher rates portable because you own it, premiums locked in full underwriting may not be done at time of purchase full underwriting done at time of purchase, changes in health afterward never affect your policy you will deal with a service department at time of claim you have an individual representative working for you To receive a free, no obligation quote from a licenced life insurance representative, email minetta.mcdonald@clarica.com. This coverage is often misunderstood. It is not an income replacement product. Disability is intended to cover a limited number of monthly mortgage payments, should you become ill/hurt and cannot work. Most individuals have sufficient coverage through their work. However if you don’t and do need income replacement (disability) insurance, call your local life insurance representative. There are several different products out there, and they can show you all of the options you have available to you. To speak to a licenced representative, please contact minetta.mcdonald@clarica.com. This is one of newest forms of protecting your mortgage. Most people do not have this through their employment benefit plans. This is referred to as the single person’s protection. After all, who will pay your bills should you become ill/disabled for an extended period of time? The plan is designed to pay you a lump sum of money should you develop any of the illness covered under your plan. There are diamond plans that cover you for 28 different illness, of which include severe burns, paralysis, Coma, loss of limbs, as well as 24 more different illnesses/conditions. By buying the basic coverage, you will be protected in the event that you have Cancer, Heart Attack, Stroke, or Coronary artery bypass surgery. This money is paid out to you directly. $50,000 of basic Critical Illness Insurance will cost $14.33 per month for a 30yr old male. There are the same concerns with this product as there are with mortgage insurance. Purchase only from licenced representatives. To receive more information, contact minetta.mcdonald@clarica.com.Mortgage Insurance
Homeowner's Insurance
Job Loss Mortgage Insurance
Mortgage Life Insurance
Disability coverage on your mortgage
Critical Illness Coverage on your mortgage