Mortgage Life Insurance vs. Mortgage Insurance
Before we discuss insurance, we need to differentiate between “mortgage LIFE insurance”, and just “mortgage insurance”…
Mortgage Insurance which can also be referred to as a CMHC Premium, is the insurance added to a mortgage, by the bank, for all mortgages over 80% of the property value. Therefore most people when buying a home with less than a 20% down payment will have this insurance premium added on top of their mortgage. This insurance if for the banks (or the lender) and covers them in case of missed payments on the loan. It does not cover you!
The major providers of mortgage insurance are CMHC, Genworth and AIG. The benefit they provide to you, although indirectly, is that banks can offer you better rates and more products because they are insured. If the banks did not get this insurance, then they would most likely decline more applicants, and charge higher rates.
Mortgage LIFE Insurance, is insurance for you, the borrower, and covers you in case of death or injury depending on the policy you get. Click on the link below for more information.
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