What is Mortgage Critical Illness Insurance?
Mortgage Critical Illness insurance pays out the outstanding balance on your mortgage, whether you can work or not, if you are diagnosed with a covered critical illness.
How does Mortgage Critical Illness Insurance Work?
Here’s an example of how Mortgage Critical Illness Insurance works:
Should he ever experience a serious illness such as heart attack, stroke, or life-threatening cancer, Salim wants to know that all or most of the outstanding balance on his mortgage would be paid off, especially since he is the main wage earner in his family.
As a result, Salim applies for Mortgage Critical Illness Insurance from his financial institution; and after answering a few health-related questions, is approved for coverage.
Eight years later, Salim is diagnosed with cancer and is unable to work. His Mortgage Critical Illness Insurance then pays off the balance of the mortgage on the family’s home.
Salim’s family members are devastated by his cancer diagnosis, but relieved that they do not have to worry about making ongoing mortgage payments during this stressful time. The insurance coverage not only eliminates the family’s largest monthly bill, it also frees up much-needed money to use for health-related expenses such as private nursing care, physical therapy, medical equipment, child care and babysitting services, and modifications to the home.
It may take several years before Salim recovers, but his Mortgage Critical Illness Insurance allows him and his family to remain in their home without worrying about having to make mortgage payments.
Conditions can vary, but Canadian residents between 18 and 55 years of age can apply for Mortgage Critical Illness Insurance with the financial institution with which they have a mortgage. Mortgage Critical Illness Insurance is sometimes sold as part of a product bundle that can include Mortgage Life Insurance, Disability Insurance and/or Job Loss insurance.
In the event that a covered critical illness occurs when Mortgage Critical Illness Insurance coverage is in place, one of your largest monthly expenses could be eliminated, freeing up money to use for health-related expenses like private nursing care, physical therapy, medical equipment, child care and babysitting services, even modifications to your home.
Is there a limit on the amount of Mortgage Critical Illness Insurance I can buy?
Most Mortgage Critical Illness Insurance plans cover up to $500,000 per mortgage or $500,000 for all mortgages combined. All insurance coverage is subject to the terms and conditions outlined in the applicable certificate of insurance which you will receive upon approval of your application.
Are there any conditions for approval?
In most cases, you only have to answer a few health-related questions and no medical examination is required. If you answer ‘No’ to the health-questions and your mortgage is below a certain limit (usually $300,000 or less), you’re typically approved. Answering ‘Yes’ to any of the health questions does not necessarily mean you won’t be approved; it simply means the insurer will contact you for more details.
Can more than one person apply?
Mortgage Critical Illness coverage is usually available for up to two borrowers on the same mortgage.
The cost of Mortgage Critical Illness Insurance is determined by your age and the amount of coverage. The older you are, and the more coverage you want, the higher the premium you will pay. All types of credit protection insurance coverage, including Mortgage Critical Illness Insurance, are provided under a group policy rather than being individually underwritten. This means more Canadians can be insured at economical standard group rates.
A number of banks and credit unions in Canada, including most CAFII member financial institutions, offer Mortgage Critical Illness Insurance. Employees at CAFII member institutions are trained and knowledgeable about the products they sell, and they can be conveniently reached in branches or at call centres. You can find a list of CAFII member institutions at: https://members.cafii.com/index.php/members_voting.
