Canadians are faced with a life-altering financial decision, and along with it, a long-term commitment, comes the threat of mortgage debt burdening their family, when planning to buy a home. In this context, Mortgage Insurance Plans in Canada assume a crucial role in financial planning.

Mortgage insurance is basically designed to shield one’s loved ones by paying off any outstanding mortgage loans in the event of death, critical illness or disability, depending on the specific plan chosen. The understanding of how these plans work is the only way to make a real difference in the financial stability of a family.

In Canada, mortgage insurance is provided in two ways, one is through the lender and the other is by the purchase of an individual policy from a licensed insurance advisor, both of which have different levels of flexibility, coverage and monetary value.

Well-known advantages of mortgage insurance plans include: financial security for one’s family, peace of mind and a chance to personalize coverage amounts and terms with separately bought plans. Mortgage insurance plans are also transferable and unlike lender-provided plans won’t be void if you choose to refinance or change your mortgage provider.

The choice between lender-provided mortgage insurance and independently bought plans has its differences. People often pick mortgage insurance through their banks because it’s easy to do, but with lender-provided plans, you are locked to that lender, whereas with individually purchased plans, the ownership is yours.  With respect to mortgage insurance plans in Canada, those provided by lenders often decline as the mortgage balance drops, have fixed premiums, send money straight to the lender, and don’t last if the mortgage is re-financed or transferred.

On the other hand, independent mortgage insurance plans, however, are known to offer level coverage, clear-cut underwriting, and ownership of the policy that stays with you, not the bank. This is a crucial factor to consider in evaluating the long-term value and control over one’s financial security.

Who may need mortgage insurance, then, are those first-time homeowners, families with dependents, self-employed workers, people with little savings and anyone who wants to ensure financial continuity for their loved ones, particularly households where just one or two people are responsible for the mortgage payments.

When choosing a mortgage insurance plan it’s necessary to take a good look at how much mortgage you have, how long you’re planning to take to pay it off, what your household income and expenses are, what life insurance and disability coverage you already have, and what your financial goals are. Working with an experienced insurance advisor helps in zeroing in on a solution tailored to one’s specific needs, and he/she can weigh up the different insurance policies on offer, and explain any exceptions so well.

Well-known insurance advisory firms that make education, fair-minded advice and putting clients first their top priorities are the ones that help homeowners make informed, stress-free decisions, while their access to a wide range of insurance providers and regular consultations ensure that coverage stays suitable as life circumstances change.

In Canada, mortgage insurance plans are a necessary part of being a responsible homeowner, and when chosen wisely, they offer long-term peace of mind, protect family assets, and give people confidence to face the future.