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A reader asks if it’s too late to get mortgage insurance, now that she is long-term disability benefits.
I just went on long-term disability, but I’m worried. I didn’t get mortgage insurance, can I still get this type of insurance?
–D.
To answer your question, we asked mortgage and real estate experts to weigh in.
The answer is probably not. However, to be sure, check with your insurance provider.
Sadly, your situation is another person’s lesson. For those that are about to get a mortgage, here’s a tip: Take the mortgage insurance offered when their mortgage is arranged. It’s not the cheapest, but it’s easier to get approved. But don’t stop there. Next, speak to an insurance advisor to see if you qualify for cheaper coverage. Once you qualify for more cost-effective insurance coverage, cancel the mortgage provider’s insurance. Most insurance providers allow you to cancel and get your money back within 30 days.
The good news, if you discover during the course of applying for term life or disability insurance that you have a previously unknown condition, at least you will have coverage with your mortgage provider. Insurance can be tricky. It’s always best to speak with an insurance advisor.
Steve Garganis is a mortgage broker at Mortgage Architects and the editor of CanadaMortgageNews.ca.
Creditor life insurance, which pays off your mortgage if you die, may still be available if you meet the insurer’s guidelines. But depending on your needs, you may be better off with term life insurance. Consult both an independent insurance agent and a major creditor life provider to compare the premiums, the periodic premium increases and the coverage differences.
Disability insurance may be tougher to come by, depending on your ailment. At the very least, it would not cover any claims related to a pre-existing condition.
Robert McLister is a mortgage columnist, founder of RateSpy and editor of MortgageLogic.news.
It sounds like you’ve had a bit of a rough go as of late. As a result, it sounds like you’re preparing for the worst, while hoping for the best.
While I’m not a mortgage or insurance specialist, I am under the impression that mortgage life insurance offered by lenders is often not the most cost-effective option. However, it does have its place in the market. That’s because bank-sponsored mortgage life insurance (also known as mortgage protection insurance) is really a combination of life insurance and disability insurance. In the event of death, the life insurance component of the policy pays off the outstanding mortgage. In the event of disability, the disability insurance component of the policy makes your regular payments.
Regardless of where you get insurance, however, there will be limitations. Most insurance coverages will not cover pre-existing conditions. So, if your health worsens and prevents you from returning to work, you may find yourself unprotected, even if you did end up purchasing disability insurance; that’s because your disability would be considered a pre-existing condition, under current insurance coverage.
But to truly find out if you can get coverage, I strongly suggest you talk to an independent life and disability insurance advisor. By explaining your situation, they may have options and answers that can help.
Romana King is a real estate expert and the author of House Poor No More: 9 Steps that Grow the Value of Your Home and Net Worth (Houndstooth Press, 2021).
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Can I buy mortgage protection insurance after I apply for long term disablit
Response from the MoneySense editorial team:
Hello Joe, thanks for asking.
Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected],
where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.