• Mike Hidlebaugh

All About Insurance!

As people start purchasing homes you hear the term insurance get thrown around more and more often and it can get confusing to distinguish between the different types of insurance and what insurance is relative to your situation. You will hear the terms mortgage default insurance, mortgage insurance, life and disability insurance, property insurance amongst others. While all of these types of insurance are important and, in many cases, essential, it is difficult to keep them straight. I am definitely not an expert in insurance – mortgages are my expertise – I do know some very qualified people who are! I am not here to provide in great detail, different insurance products but rather just help people understand the difference between the different types of insurance.



Mortgage Default Insurance


You are required to have mortgage default insurance as a homebuyer, if you have a down payment of less than 20%. This insurance does not protect the borrower, but rather protects the lender in the event the borrower defaults on their mortgage. In Canada we have three mortgage default insurance providers – CMHC, Sagen, and Canada Guaranty and the lender decides which insurer to send your mortgage to, based on your overall scenario. They all have the same insurance premiums that depend on the down payment percentage. The higher your down payment, the less your premium will be based on distinct tiers.


Mortgage Life Insurance


Mortgage Life Insurance or Creditor Insurance is insurance that mortgage brokers offer that will cover the balance of your mortgage if something happens to you. As a Mortgage Associate, I am obligated to offer this type of insurance to all clients whether they have another policy already or not and it is up to the clients whether they want to accept it or not. It can work hand in hand with other policies as well as you could use the money received from other policies for expenses not related to your mortgage. The amount you are covered for essentially declines as your mortgage balance declines as they are tied to one another.


Life & Disability Insurance


This is insurance that you would receive through a licensed insurance agent. This insurance is not tied to your mortgage and can be used in any fashion that the beneficiary sees fit. The amount you are covered for remains constant throughout the term of your insurance policy and does not end when your mortgage is paid off.



Home Insurance


This is insurance you obtain from a licensed insurance provider. It protects the inside and outside of your property as well as its contents. It generally covers: damage or loss to your home; damage, theft, or loss of contents within the home and; injury to people visiting your home. There are different policies that individuals can get so it is important to discuss your situation with a qualified, licensed insurance provider.


As you can see there are many different types of insurance that you need, especially when you purchase a home. It can get confusing so it is essential to talk to the right insurance broker about your different insurance needs. As I mentioned above, I know many experts in the different insurance fields and I can put you in contact if you would like further information or have questions.

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Mortgage Associate Licence: 316894

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Brokerage Licence: 316176