When purchasing a home in Saskatchewan and securing a mortgage, consider insurance options to protect your investment and your loved ones. You may come across two common types of insurance: mortgage and life insurance. While they may sound similar, they serve distinct purposes.
Mortgage Insurance vs. Mortgage Life Insurance
Here, we’ll clarify the differences between mortgage insurance and mortgage life insurance to help you make an informed decision about which one suits your needs.
Mortgage Insurance
- Purpose: Protects the lender in case of borrower default.
- Mandatory for High-Ratio Mortgages: Required for down payments under 20%.
- Cost: A one-time premium based on the loan-to-value ratio.
- Beneficiary: The lender receives the payout.
Mortgage Life Insurance
- Purpose: Protects your family from the mortgage burden in the event of your death.
- Voluntary Coverage: You can purchase it independently or as an add-on to existing life insurance.
- Cost: Monthly premiums that remain consistent.
- Beneficiary: You designate your family members as beneficiaries.
Choosing the Right Insurance
When deciding between mortgage insurance and mortgage life insurance in Saskatchewan, consider your priorities. If your primary concern is protecting your loved ones from the financial burden of the mortgage in case of your untimely death, mortgage life insurance may be the better choice. However, if you must obtain mortgage insurance due to a high loan-to-value ratio, understand that this insurance primarily benefits the lender.
Before making a decision, consult with a qualified insurance advisor to assess your specific needs and explore the options available. Doing so lets you create a well-informed choice that aligns with your financial goals and provides peace of mind for you and your family.
Give the team at City Centre Mortgages a call today so we can help you with all of your mortgage needs in Saskatchewan!