March 17

Mortgage Critical Illness Insurance

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What is mortgage Critical Illness Protection?

Nearly 50{a03822e28c5c906589e58caafc71b922ff7b2692d58bfeefe8f12d55f85871c7} of mortgage foreclosures in Canada are caused by an illness or a disability. That’s not surprising considering that we are twice as likely to get a critical illness (heart attack, stroke, cancer etc.) before the age of 65 than we are to die. 

The good news is that because of earlier diagnosis and better treatment options we are not passing away as much when we are diagnosed with a critical illness. However, that doesn’t change the fact that we will still often need several months to recover from a life threatening illness. During that time, how will we be able to afford our mortgage payments? Our car payments? Our food?

Your home is more than just your most valuable asset, it is the place where you find shelter and a place you call your own. Purchasing a property often means being responsible for a large mortgage. A prolonged period of time where you are unable to work because you are recovering from a life threatening illness could make it hard to pay your mortgage on time or at all. What kind of an impact would it have on you and your family if you were to lose your home? Would the added stress having to figure out a way to pay the mortgage aid in your recovery or impair it?

This is why mortgage critical illness is one of the most effective ways to manage your risk and protect your income. This type of income protection will pay a lump sum, tax free benefit if you are diagnosed with either heart attack, stroke, cancer, or a list of other illnesses. This lump sum tax free benefit can be used to make the mortgage payments, seek private treatment or be used however else you see fit.

How can I use mortgage critical illness protection to my benefit?

The best way to use mortgage critical illness is as an affordable way to protect your income and pay your mortgage if you get ill. This will allow you the security of being able to recover from your illness on your terms.  You cannot put a price tag on your peace of mind. Once mortgage critical illness is put into place you will know that even a life threatening illness is not enough to derail your financial plan.

True financial security comes from knowing that you are in control of your financial destiny. Using critical illness insurance is the most affordable way of having this security. How would having a lump sum benefit of $50,000 to $100,000 help you when you are recovering from a critical illness? 

You could find the best health care in the world.

Perhaps do some travelling? Pay off some debts (like your mortgage)? Or anything else you want.

Many people don’t know how easy it is to protect one’s self from getting financially ruined if you were to get sick. That’s why it is so sad that people have to suffer so much if they get a life threatening illness and are not covered. The living benefit that Critical illness insurance provides will be the biggest relief that you can get at a time that you need it most.

What kind’s of critical illness plans are available?

Mortgage Critical illness coverage can come in the form of a term policy (where the premiums are fixed for a certain period of time and increase after) or a permanent policy (where the premiums stay the same for the life of the policy). But the biggest difference’s between the type’s of policies have to do with how they are underwritten

Mortgage Critical Illness Insurance

When obtained with the help of a licensed insurance agent, the most desirable way to get critical illness protection on your mortgage is by going through the entire underwriting process. This will usually mean a longer health questionnaire and depending on the amount that you are applying for, a medical exam. 

Once the coverage is in force, chances are you are getting the most affordable type of coverage, that has the most amount of flexibility, and control. You will be able to control the amount that you apply for to a certain extent, the length of that coverage, and you will be covered for more conditions. If you are relatively healthy this is often the best way to go.

No Medical Exam Mortgage Critical Illness Protection

If you have had previous medical conditions or have a lifestyle that is hard to insure then it may be better to apply for income protection that requires no medical exam. It can often mean that the policy is issued faster and with much less underwriting. The drawback, however, is that you may be limited to certain maximums in terms of the benefit amount and your premiums may be higher than with regular critical illness protection. Also, you may not be covered for as many conditions as with a fully underwritten policy.  Almost all policies will cover heart attack, stroke, and cancer though.

Creditor Protection From the Bank

The least desirable of the types of mortgage critical illness plan’s available is creditor protection that you get from the bank. This is often the most expensive coverage with the least amount of control, the lowest number of conditions covered and hardly any flexibility. It should be avoided like the plague. If you are dealing with an independent licensed insurance broker they will likely ensure that you don’t make the mistake of investing your hard earned money on this type of coverage.

How can I save money when investing in critical illness protection for my mortgage?

The best way to save money on the critical illness protection of your mortgage is to apply for the insurance that is ideal for your unique circumstances. The only way to do this is by completing a health and lifestyle evaluation, along with an insurance needs analysis. Once that is done, use an insurance agent to leverage their knowledge about all the insurance carriers in the market so that they can get you the best terms and conditions on your policy. Applying for mortgage critical illness insurance is not something that you do everyday, having someone on your side that knows the insurance market in Canada can save you thousands of dollars in premiums over the life of the policy and structure the policy for you in a manner that will provide you with the greatest benefit. 

Another way to save money is to apply for insurance early. The calculation of the premiums will be based on your age and your health. Insurance will never be more affordable than it is right now and waiting too long can actually make it far more difficult to get the coverage you need because the premiums will increase as you get older. 

Basically, having an independent insurance advisor when you are shopping for critical illness insurance can save you a ton of money, while assisting you throughout the process with absolutely no cost to you.

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