March 17

Three ways to make sure you never lose your home to foreclosure

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In Canada, 52{a03822e28c5c906589e58caafc71b922ff7b2692d58bfeefe8f12d55f85871c7} of mortgage foreclosures are caused by an injury, illness, or death.  As long as you are alive and healthy chances are you will be able to make your mortgage payments.  But, if you are unable to work for a while, or you pass away then who will make the payments for you?  Will your family be able to afford them without your income around? That’s why you should protect your mortgage with insurance

The truth is, that the best way to make sure your family keeps the roof over their head is to make sure that your income is protected in the event that you pass away, become ill, or get hurt.

Below, are the three most cost-efficient ways of keeping your home when life happens to you.

Mortgage Life Insurance

When you pass away, if you have a mortgage outstanding that debt would be passed on to your love ones.  Is that something that they will be able to meet at a time when they are grieving your loss?  Was your income meant to help pay that mortgage?  If they are unable to meet the mortgage payments, after 90, days the bank will foreclose on the property forcing them to find a new home.  Any equity that is in the property could be jeopardized, not to mention the additional costs of having to find a new place to live.

Literally for pennies a day, a mortgage life insurance policy can be put in place that would pay a lump sum tax free benefit to your family that can be used to pay off the mortgage in its entirety.  Imagine how helpful it would be to your spouse and children at a time when they are probably devastated by your loss.  They will no longer have to deal with the mortgage, as the house would be paid off, becoming an asset for them.  You can enjoy the peace of mind of knowing that your family will always be taken care of financially even when you are not there to do it for them.

Disability Insurance

Depending on occupation and gender, the chances of a Canadian being disabled for longer than 90 days before the age of 65 is as high as 55{a03822e28c5c906589e58caafc71b922ff7b2692d58bfeefe8f12d55f85871c7}.  That means that it is likely, that in your lifetime you will be injured for more than 90 days at some point.  Combine that with the fact that the average disability over 90 days usually lasts between 1.5 to 3 years and you have a recipe for getting your house foreclosed on.  More people have lost their home because of injury or illness than any other factor that exists to date.  What is sad is that when people get sick or injured it is usually because of no fault of their own, just unfortunate circumstance.  Their only fault was not having a plan in place.   

Unfortunately, WCB will usually not be able to cover us because only 6{a03822e28c5c906589e58caafc71b922ff7b2692d58bfeefe8f12d55f85871c7} of accidents will result in a WCB claim. Hopefully, your employee benefits program has some disability insurance coverage, but it will probably be inadequate to cover all your expenses as it usually a percentage of your income up to a certain maximum.

The good news is that this is easily avoidable. A mortgage disability insurance protection plan will pay a monthly benefit that can be used to make your mortgage payments while you are at home recovering.  You can relax knowing that this income will continue until you are 100{a03822e28c5c906589e58caafc71b922ff7b2692d58bfeefe8f12d55f85871c7} ready to get back to work.  People are often surprised when they find out how affordable it can be to protect their income against getting hurt.  The truth is, not having a plan in place for when we get injured is what we can’t afford.

Critical Illness Insurance

As stated previously, close to 50{a03822e28c5c906589e58caafc71b922ff7b2692d58bfeefe8f12d55f85871c7} of mortgage foreclosures in Canada are a result of an injury or illness. The good news is that because of earlier diagnosis and better treatment options people are surviving more often when they are get a life-threatening illness. The bad news is, that we often need months to recover during which we will be unable to go to work. 

That’s right, you guessed it, not being able to go to work causes that same problem of having to make your mortgage payments when you are unable to earn money. Having to give up your house when you are recovering from cancer, heart attack, or stroke is probably not going to help in your recovery. Don’t let yourself be in a position like this when it is so easily avoidable.

Mortgage critical illness insurance will pay out a lump sum tax free living benefit that can be used to pay all or part of the mortgage. This income can be used to take time off work so that you can focus on getting your health back. Use the money however you want, pay off debts, travel, or even get better health care.

To summarize, studies have shown that Canadians are usually able to make their mortgage payments if they are able to work. Most foreclosures happen because of some accident or illness that prevents people from going to work. Your best defense against foreclosure is to make sure that your income is protected, and the most affordable way to do this is to own insurance.

The first step in putting together a plan to protect your income is to get a free no-obligation consultation with a licensed insurance professional. They can help you complete an insurance needs analysis, and a health and lifestyle evaluation. This will help to choose the best type of insurance as well as the best insurance company potentially saving you thousands of dollars in premiums.

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