If you have a mortgage, do you need mortgage protection insurance? Maybe — but before answering that question, there’s an important misconception to clear up. 

If you bought your home with less than a 20% down payment, you likely already paid for mortgage default insurance. That insurance protects the lender if you default on your mortgage, it doesn’t protect you or your family if illness, disability or death suddenly affects your ability to make your payments. 

That’s where mortgage insurance comes in! 

Mortgage Protection Plan (MPP) is about protecting the people behind the mortgage. Depending on the coverage, it can help pay off your mortgage if you pass away or help make your mortgage payments if a qualifying disability leaves you unable to work.  Let’s investigate in more detail: 

Mortgage life insurance: This is intended to pay off your mortgage in full in the event of your death. It may make sense if you’re the primary income earner for your family, have young children, or want your spouse or family to be able to stay in the home if you pass away and they would otherwise be unable to make the mortgage payments without your income. 

Mortgage critical illness and disability insurance: This type of coverage is intended to make your mortgage payments for you during your injury or disability. It does not pay off any outstanding balances but rather makes regular payments, for a specified period of time, when you are not working or receiving your regular income.  Here, you will need to carefully review what is and isn’t covered to avoid any lapse in coverage, uninsured illnesses, etc.   

Of course, you may already have coverage through work or a private insurance policy.  That’s why I encourage clients to look at their entire insurance picture with an appropriately licensed insurance professional to identify potential gaps or overlaps. 

Through my connection with Dominion Lending Centres, I can provide my clients with a mortgage protection option worth considering. Manulife’s Mortgage Protection Plan (MPP) has a number of great features and what is particularly interesting is the plan’s portability. The coverage is between you and Manulife rather than being tied to a particular lender/property meaning if you later move your mortgage to another lender, the coverage can move with you rather than requiring you to start over simply because you changed lenders. 

Other features of MPP include: 

• Coverage starts as soon as you apply, meaning you’re immediately insured 

• Plans are based on the mortgage, not income; that means it doesn’t matter where you work, what you make, or if you choose not to work at all; you still have coverage 

• You get a 60-day money-back guarantee if you decide the policy isn’t right for you 

• Premiums are waived for up to 3-months if you lose your job 

Is MPP mandatory? Absolutely not. Mortgage insurance is optional and choosing not to purchase it or going with a different provider, cannot be used as a reason to deny your mortgage application. 

It also won’t necessarily be the right solution for everyone. Coverage, eligibility, exclusions and benefits matter, and your existing insurance should be considered as part of the conversation. 

A good mortgage plan should look beyond getting you the mortgage. It should also encourage you to think about how that mortgage fits into your family’s financial life — today, and if circumstances change.  Regardless of which provider you work with, seeking advice about your specific insurance needs and coverage from an appropriately licensed insurance professional will give you peace of mind while you look at the bigger picture.