For most of us our homes are our biggest investment and – for at least a period of time – our biggest liability. Buying a home is a major financial commitment that might see you making payments for up to 30 years. It makes sense for us to do our best to protect our investment, and ultimately our families’ future financial well-being and safety.
Ensuring that you and your family can weather financial hardship as a result of unexpected life events has always been important. This is especially true in the current environment, in which COVID-19 has us all re-evaluating our financial situation to ensure our families are adequately protected.
Mortgage Protection Insurance is optional creditor insurance that can help make sure your family can remain in their home should you experience certain unforeseen life challenges. A sudden illness, disability, job loss, or loss of life can put a substantial strain on a family’s finances. Making regular payments towards any debt may become difficult – particularly a mortgage, which is usually your biggest financial obligation. In general, Mortgage Protection Insurance benefits paid go directly towards paying your mortgage debt, offering a helping hand during a financially stressful time.
71% of Canadians who have credit protection insurance on a mortgage and/or home equity line of credit said that without the insurance, they do not know how they and/or their family would be able to cope should an unexpected life event negatively impact them financially.1
There are usually 4 common coverage options available through Mortgage Protection Insurance:
This coverage can help pay the outstanding balance on your mortgage if you pass away. A lump-sum payment goes directly to the mortgage lender to pay off the outstanding balance, helping to ease the financial strain on your loved ones during this difficult time, and allowing them to remain in their home.
Life coverage can complement other insurance you may have through your employer or private insurance to allow you to leave a larger financial safety net for your family. Your family may not need to tap into other insurance to pay off the mortgage, which could significantly deplete any insurance payout.
2. Critical Illness
This coverage can pay the outstanding balance on your mortgage if you are diagnosed with a covered critical illness. The critical illnesses covered typically include certain types of cancer, heart attack or stroke.
With this coverage option you can focus on getting better and not worrying about mortgage payments. If you have additional insurance through your employer or private insurance, you could then choose to use these funds for expenses associated with your recovery.
This coverage can take care of your monthly mortgage payments for a specified amount of time if you become disabled due to certain types of injury, disease or illness and are unable work.
Disability coverage allows you to focus on your recovery and not be concerned with finding money to meet your monthly mortgage payments.
4. Job Loss
This coverage can help maintain your mortgage payments for a specified period of time if you are unable to work because you involuntarily lose your job or are permanently laid off. This coverage gives you some time to concentrate on finding a job, and possibly upgrading your skills.
What’s the difference – Mortgage Protection Insurance vs. Mortgage Default Insurance?
While Mortgage Protection Insurance is optional creditor insurance that can help pay off your remaining mortgage balance or cover your mortgage payments in the event of a sudden illness, disability, job loss, or loss of life, by law Mortgage Default Insurance is required when homebuyers are putting less than the 20% down payment typically needed to qualify for a conventional mortgage.
Mortgage Default Insurance protects a lender in the event a borrower defaults on their mortgage and the lender is not able to recover the full amount owing after taking steps to sell the property. The borrower is responsible for paying the mortgage default insurance premium when the mortgage is set up.
Mortgage Protection Insurance can help protect your biggest investment and help ensure your loved ones can continue to enjoy their home because, when all is said and done, there’s no place like home.
What is Scotia Mortgage Protection?
Scotia Mortgage Protection is optional creditor insurance available exclusively for Scotia Mortgage account customers in Canada. During times of financial difficulty as a result of specific unexpected life events, it will help to maintain the home and lifestyle you’ve worked hard to build.
Scotia Mortgage Protection offers you four coverage options – Life, Critical Illness, Disability and Job Loss.
In the case of Loss of Life or a specified Critical Illness, this coverage can pay off your outstanding mortgage balance or in the event of Disability and Job Loss, it can maintain your monthly mortgage payments.
Life coverage can help pay the outstanding mortgage account balance, up to $1 million for all insured mortgage accounts combined, if you pass away.
Critical Illness coverage can help pay the outstanding mortgage account balance, up to $500,000 for all your insured mortgage accounts combined, if you are diagnosed with a covered critical illness (e.g., heart attack, stroke or cancer).
Disability coverage can help cover your mortgage account payments, if you become disabled and unable to work, up to $3,500 per month, for a maximum of 24 months per disability.
Job Loss coverage can cover your mortgage payments, up to $3,500/month per mortgage for a maximum of 6 months, when employment is involuntarily terminated or if you are permanently laid off.
To learn more about Scotia Mortgage Protection and the coverage options that may work best for you, visit Scotia Mortgage Protection and check out the helpful videos and tools available, like the below.
Scotia Mortgage Protection
Maintain the home and lifestyle you’ve worked hard to build.
What's an insurance premium?
Find out what a Scotia Mortgage Protection premium is and how it’s calculated.
1 The Canadian Association of Financial Institutions in Insurance (CAFII) commissioned national online survey of 1,003 adult Canadians who have Credit Protection Insurance on a mortgage and/or home equity line of credit. The survey was conducted from October 3 to 16, 2018 Pollara Strategic Insights
2 Source: 2020 Canada Mortgage and Housing Corporation (CMHC), Equifax and CMHC calculations, among newly originated mortgages.
3 Mortgage Professionals Canada Survey, Fall 2018.
4 Mortgage Professionals Canada - Annual State of the Residential Mortgage Market in Canada 2018.
5 Source: LIMRA Canadian Life Insurance Ownership Study – 2019 Person-Level Report.
6 Ipsos Survey https://www.ipsos.com/en-ca/news-polls/half-48-canadians-are-less-200-away-monthly-being-financially-insolvent
7 Life Insurance and Market Research Association, “Canadian Billion Dollar Baby Revisited: Sales Potential of the Underinsured Life Insurance Market” 2014.
8 Ontario Stroke Network http://www.ontariostrokenetwork.ca/wp content/uploads/2013/07/Final_Fact_Sheet_Stroke_Stats_3.pdf
The Bank of Nova Scotia is not an insurer and this is not an offer of insurance. Full details of these coverages are available in the certificates of insurance which are provided to the customer upon enrollment.
Scotia Mortgage Protection, Scotia Line of Credit Protection and Scotia Loan Protection are each underwritten by The Canada Life Assurance Company. Scotia Credit Card Protection is underwritten by Chubb Life Insurance Company of Canada.
Eligibility, waiting periods and limitations relating to pre-existing conditions restrictions apply to certain coverages. All coverage is subject to the terms and conditions outlined in the Certificate of Insurance which is provided upon enrollment.
Legal Disclaimer: This article is provided for information purposes only. It is not to be relied upon as financial, tax or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and The Bank of Nova Scotia is not responsible to update this information. All third-party sources are believed to be accurate and reliable as of the date of publication and The Bank of Nova Scotia does not guarantee its accuracy or reliability. Readers should consult their own professional advisor for specific financial, investment and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.