There are options. You can opt for Mortgage Insurance; it’s available when you secure your mortgage through a bank or credit union. Another choice is a product like Canada Protection Plan’s 25 year term Life Insurance which can be a great option for people with mortgages. Whichever you choose, your home (and mortgage) will be protected. But you should know some key differences between options before committing one way or the other.
Cost
Premiums on Mortgage Insurance are typically higher than on a 25 Year Term Life Insurance plan, and these premiums can go up if you renew, sell your home or switch lenders to secure a lower mortgage rate.
With a term life insurance policy in place the advantages are:
Portability
With some financial institutions, you can’t take this insurance with you; you’ll need to apply for new Mortgage Insurance if you renew, switch lenders, or move. Term Life Insurance on the other hand, stays with you wherever you go.
Payout Flexibility
With Mortgage Insurance, the payout decreases over time. However, with a term life Insurance plan, the coverage purchased does not decrease and your beneficiaries can use the end payout as they wish. Funds can be used towards funeral expenses, children’s education, income replacement or other debts. Mortgage Insurance on the other hand, can only be used to pay off your mortgage.