Owning a home is something you've been dreaming about for a long time. You've worked it all out and you know how much you can afford.
Financially speaking, it's a major decision. According to Statistics Canada, mortgages on principal residences and other property capital of Canadian families represented over a three quarters (75,3 %) of their debt in 2005.
This type of loan can have a significant impact on your family's finances. It is important to safeguard your financial security and that of your loved ones. That's what loan insurance is all about. It's straightforward, accessible insurance designed specifically for borrowers.
Two types of coverage
Most lending institutions offer two types of insurance coverage on their mortgage loans. One consists of life insurance, which reimburses the mortgage in the event of death, and the other is disability insurance, which covers the loan payments in the event of total disability.
Select mortgage loan insurance that offers the best types of protection available and best meets your financial security needs.
Long term
A standard mortgage term is 20 years, a period during which you can potentially experience various health problems. If you or your spouse should die, the surviving spouse could, with loan insurance, make the mortgage payments. The situation would be similar with disability insurance if, in the event of a disability, one of you could not work and was unable to contribute to the loan payments.
Loan insurance is also a useful complement to disability insurance offered by an employer (which generally only makes up 60% to 70% of the insured person's salary) since expenses tend to increase with a disability due to such things as drugs, convalescence or the rental of a wheelchair.
Premium payment
Getting both a loan and insurance from the same institution has certain advantages. For instance, the process involved in making a claim is usually simpler. Also, some institutions integrate the insurance premium into the loan payment. This means the premium is based on the loan balance and therefore decreases at the same rate.
Special features
Certain loan insurance products have special features. For instance, with Desjardins Financial Security's Loan Insurance, you can insure all or just a part of the loan.
In addition, it offers additional coverage for mortgage borrowers, called Home-owner Plus. In the event of a total disability, this coverage pays a benefit that corresponds to 150% of the loan payments. This enables borrowers to make their loan payments and also cover expenses like property taxes, school taxes, electricity, heating, etc.
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