Why would you want to protect your mortgage?
Your mortgage is likely your largest financial obligation and asset, and your home is likely an important part of your life. Life happens, and something unexpected could interfere with your ability to keep up with payments — putting your home and your family's stability at risk.
Mortgage protection coverage is designed to bridge that gap, ensuring you have support to meet your mortgage obligations when you can't cover them yourself.
How does traditional mortgage protection insurance work?
Mortgage protection insurance is typically creditor insurance, meaning a claim is paid directly to the lender. It's offered by the lender (sometimes in partnership with an insurance provider) at mortgage signing, and it's structured around the lender's interests as much as yours.
A few key features to understand:
Flat premiums, declining benefits. Premiums typically stay the same throughout the term, but coverage decreases as you pay down your mortgage, since it's tied to your remaining balance.
Not portable. The policy is tied to your mortgage with that specific lender. If you switch lenders at renewal, you may lose your coverage and have to requalify — potentially at an older age or with different health circumstances.
Post-claim underwriting. With some lender policies, full medical underwriting happens at the time of a claim, not at application. Coverage could be denied after the fact, based on your medical history.
Limited critical illness coverage. Many lender policies cover only three major critical illnesses.
How does an alternative mortgage protection solution work?
An example of personalized mortgage protection that pays to you or your beneficiary instead of the lender is Prospr by Sun Life™ — and it works differently from traditional creditor insurance.
A solution from Prospr includes a life insurance policy and a critical illness insurance policy to help protect your ability to pay your mortgage if something unexpected happens, and offers the ability to adjust your coverage to your needs.
This solution can still be offered by your lender at the time of your mortgage signing, same as traditional mortgage insurance, arranged through a licensed Prospr insurance advisor. A True North mortgage broker can help ensure this option is available to you, depending on your lender.
Key features of Prospr by Sun Life:
You or your family receives the benefit. The claim funds go to you or your family to use as needed — whether that's paying off the mortgage, covering living expenses, or managing finances through a difficult time.
Coverage stays level. Unlike mortgage protection insurance tied to your remaining balance, Prospr's term life coverage stays at the amount you set, even as you pay down your mortgage.
It travels with you. Coverage isn't tied to a specific lender or mortgage, so it stays intact if you switch lenders, refinance, or move.
Underwriting happens upfront. Medical questions are asked at application, not at claim — reducing the risk of a denial or lower payout when it matters most.
Broader critical illness coverage. Prospr's coverage currently includes 26 illnesses, compared to the 3 typically covered under lender policies. Talk to your Prospr insurance advisor about adding disability coverage.
Guaranteed premiums. Your premiums are set at the time of application and don't change during your policy term.
What should you ask before you decide?
Whether you're considering traditional mortgage protection insurance or an alternative mortgage protection solution, like Prospr by Sun Life, here are some questions worth asking:
- Who is the named beneficiary — the lender or my family?
- Does my coverage amount stay the same, or decrease as I pay down my mortgage?
- Are my premiums guaranteed for the life of the policy?
- What happens to my coverage if I switch lenders at renewal?
- When does medical underwriting happen — at application or at claim?
- What critical illnesses are covered, and how many?
- Is disability coverage offered?
Suit up with the best fit.
Our expert, friendly True North Mortgage brokers really know mortgages. We run the gauntlet to ensure your mortgage fits your budget and your life. (Not every knight wears armour — some just carry a good mortgage rate.)
The right mortgage fit also includes understanding the most suitable financial protection for your needs, which can help prepare you for the future if something doesn't go according to plan.
Across Canada, we're here to answer initial questions about your options and connect you with professional insurance advice.
Disclaimer: The insurance details provided above are subject to change. True North Mortgage is not an insurance broker. Please contact a licensed insurance advisor for details about your situation.
