Mortgage life insurance pays the balance on your mortgage to the lender in the event of your death. This can be useful if you have dependants or a spouse who might like to stay in the home after your death, but who might not be able to continue making the same mortgage payments as before.
Remember that your home can be sold to pay back the mortgage, so mortgage life insurance may not be necessary for you.
Term or permanent life insurance could be an alternative to mortgage life insurance. If you die, your beneficiaries can use the insurance money to pay for the mortgage.
Mortgage disability or critical illness insurance will make mortgage payments to your lender if you cannot work due to a severe injury or illness. Most insurance plans have a number of conditions attached to them, including a specific list of illnesses or injuries that are covered or excluded. Pre-existing medical conditions are usually not covered. These terms and conditions of insurance are listed in the insurance certificate, so ask to see it before you apply so that you understand exactly what the insurance covers.
Before you buy mortgage disability or critical illness insurance, check whether you already have insurance coverage that meets your needs.
Title insurance provides coverage for losses related to title fraud, survey issues, problems with the title on your property and challenges to the ownership of your home.
Title fraud can happen when criminals steal your identity in order to get a new mortgage on your property, or when they fraudulently transfer your title to themselves and then either sell it or mortgage it. For more information, see Protecting Yourself from Real Estate Fraud.
One example of the types of problems covered by title insurance is an error revealed by a new survey, such as a deck or garage that is actually on a neighbour's property.
There are two types of title insurance:
The cost of mortgage life, disability or critical illness insurance, called the premium, is charged on an ongoing basis. The cost of the premium depends on your mortgage amount and your age.
The premium for title insurance is a one-time cost that is generally paid when you purchase the property in the case of homeowner title insurance, or when you close on your mortgage in the case of lender title insurance. If you do not purchase title insurance when you buy your home, you can purchase it at a later date from most title insurance companies. The cost is based on the value of your home.
You can buy mortgage life and disability insurance through your mortgage lender, or through another insurer or financial institution. It is a good idea to shop around to make sure you are getting the best insurance to meet your needs.
If your mortgage lender is a federally regulated financial institution, such as a bank, it is not allowed to require you to buy mortgage life insurance as a condition for approving your mortgage. For more information, see the section called "Coercive tied selling".
Title insurance is available from your lawyer (or notary in Quebec and British Columbia), title insurance companies, insurance agents and mortgage brokers.