What is mortgage insurance?

In Alberta, mortgage insurance is a protection product typically offered by your mortgage lender or financial institution.

In the unfortunate event of your death, and your mortgage loan still outstanding, this insurance will pay off the remainder of your mortgage debt. It should not be confused with mortgage default insurance or mortgage loan insurance coverage.

There are several problems with lender-provided mortgage insurance: coverage value reduces with time, premiums get more expensive with age, premiums increase when you refinance or port your loan, you have no control over the proceeds, and the coverage is not guaranteed!

Instead, Albertans are better served by mortgage protection through term life insurance policies like the ones with Private Lane Advisory.

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Private Lane Advisory mortgage insurance

Mortgage insurance and its related products go by several different names in Alberta. How can you tell the difference between each type of mortgage insurance?

So how does mortgage protection life insurance work?

Mortgage protection life insurance provides a consistent payout that is not tied to your mortgage debt. Instead, it is a term life insurance policy: the term simply matches your mortgage's amortization period.

The payment is guaranteed as the policy is underwritten when purchased - meaning the insurance company takes your personal factors into account when determining the price. Because of this extensive underwriting, the premiums are typically lower. Your beneficiaries have complete control over how they wish to use the proceeds of mortgage life insurance – even if you’ve paid off your home.

Many Albertans choose mortgage life insurance as an alternative to mortgage insurance not only to save money but also for its added flexibility. This is why you should choose to work with Private Lane Advisory for your mortgage life insurance protection. 

Mortgage Insurance versus Mortgage Protection Life Insurance

When compared head-to-head, term life insurance beats mortgage insurance for protecting your home and your loved ones. Private Lane Advisory can help put you at ease by comparing the two below.

Mortgage Insurance

Mortgage insurance will only cover the decreasing, outstanding mortgage balance. It is designed to only cover the borrower. There is no fllexibility to change the amount or the term of the insurance. Coverage will reduce with monthly mortgage payments and is not guaranteed it is only evaluated at claim. Your lender is the benficiary. You will have generic rates, generally higher, and they will stay the same with reducing coverage. If / When you switch lenders - your coverage may be lost. This can only be used by lenders to pay the outstanding balance of the mortgage. 

Mortgage Protection Life Insurance

Mortgage protection life insurance will cover everything from debts to family expenses and obligations like a conventional loan or property taxes. This can cover you and your family, and you can increase coverage amount and the term. Consistent coverage for you and your family throughout the term. This will have guaranteed coverage - meaning a higher probability of paid claims and lower waiting period. You can choose your beneficiary and there are personalized premiums with lower pricing for healthier clients. You will also have the ability to switch lenders throughout the mortgage term and can use the proceeds in any way to create a more flexible financial plan. 

Do you require mortgage insurance?

Mortgage insurance is not a mandatory insurance that someone requires. Instead, a homeowner can choose mortgage protection life insurance - such as a term life policy.

It pulls double the duties, protecting your mortgage debt and covering other life insurance needs at the same time. This means with a policy at Private Lane Advisory, the same policy that you will use to protect your mortgage loan can also be used to cover the cost of living for those you leave behind in the unfortunate event of your death. 

Is Mortgage Insurance worth it if there is a Mortgage Protection Life Insurance option?

Generally, the premiums are higher than other available forms of insurance, and the benefit you receive - in this case a fully paid off home for those you leave behind - is not guaranteed. Instead, mortgage protection through term life insurance with Private Lane Advisory can provide a more flexible benefit that does a superior job of protecting your home and your family in the event of your passing.

Mortgage insurance products from your bank or mortgage provider are not worth it. 

Is mortgage insurance just a waste of money then?

Mortgage insurance is not a waste of money in specific circumstances. In cases where you do not qualify for private mortgage insurance through a term life policy or other insurance products - that would cover your mortgage, mortgage insurance may be worth it.

Disqualification could be due to family medical history or an illness, which prevents you from getting approved for coverage. In these rare cases where mortgage insurance is your only alternative, it’s worth it. Mortgage insurance coverage is better than no coverage at all.  

How much will mortgage insurance cost?

Many different factors will go into the cost of mortgage life insurance. There are individual factors pertaining to your insurability, like age, smoking status, gender, health and more. There are also policy-dependent factors that hinge on your mortgage amortization period, like the amount of coverage you need and the length of the term.

Private Lane Advisory can help you get a mortgage life insurance quote. Private Lane Advisors will take into account your gender, smoking status, health, family medical history, occupation and other risk factors that will inform the potential costs of your insurance premiums.

You'll receive a private mortgage insurance quote from many of Alberta's largest carriers and may be drastically less expensive than lender-provided mortgage insurance premiums.

What is the average cost of mortgage insurance?

The cost of a mortgage protection insurance policy - term life insurance - depends on personal factors and the details and depth of your desired coverage. things like Age, smoking status, and health are some of the biggest personal determiners of the cost of a term life policy. The length and amount of coverage you need may be dictated by your outstanding mortgage balance and the number of years you have left in payments.

Term life insurance premiums, $500,000 death benefit, non-smoking, 20-year term 

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Let’s Find the Right Mortgage Insurance Coverage Plan That Works for You

You may not be required to have a Mortgage Insurance or Mortgage Protection, but Private Lane Advisory is here to help protect you and your family from financial ruin.

Private Lane Advisory will walk you through your options, compare quotes from Alberta’s top insurers, and create a plan that supports you — without stretching your budget.

Start with a free consultation today.

No pressure. No obligation. Just expert advice tailored to you

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