Mortgage loan and life insurance

Mortgage loan and life insurance

If you buy a house, the lender or the bank will ask you for a guarantee on the future asset to be financed. They will therefore ask you to take out insurance at the same time as your purchase, in order to be covered for your mortgage repayment if something happens to you. Your lender, or the banking institution you are borrowing from will obviously offer you to take out the mortgage insurance they offer.

But be careful, note that you have the right to take the insurance you want! Life insurance is a great alternative to mortgage insurance and in particular offers much more freedom to the underwriter. Here are the main differences:

Lender's mortgage insurance Life insurance
Beneficiary The lender who uses the death benefit to repay the property The beneficiaries you designate
End of coverage The coverage ends after the total repayment of the loan You decide on the duration
In the event of death The lender uses the amount paid to pay off the remaining mortgage balance Your beneficiaries receive the full amount tax-free and can pay your mortgage
In the event of disability Mortgage insurance generally offers optional disability insurance Disability is not covered by life insurance, you must take out other disability insurance
Premiums No change during the term of the loan Premiums may change in stages during the term of the contract for temporary life insurance.
Mortgage insurance vs. life insurance
Can I take out life insurance for someone else?

You can take out a life insurance policy for yourself or for someone else. Most often, life insurance contracts are taken out either for oneself, or for a spouse, child, parent, grandchild, grandparent etc.

Some insurers will ask you for written permission to insure someone else's life, especially if that person is not on your next-of-kin list.

You must then, as with a normal life insurance contract, designate a beneficiary. It could be you or someone else. If you do not name anyone, you - the policyholder of the life insurance policy - will automatically be named as beneficiary.

You are also allowed to take out life insurance for an unborn child, for example.

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Can I take out child life insurance?

The majority of available life insurance policies allow you to add an amount of protection for a child's life. This helps secure the child's future at low cost. From your child's first year, you can take out a life insurance policy with paid premiums beyond a certain number of years.

You will therefore no longer have to pay premiums after a certain period of time, but your child will remain insured for the duration of the life insurance contract.

8 tips for buying life insurance

Below are X great tips and reasons to buy life insurance. Life insurance is not only a tax-free amount that we pay to our loved ones after our death, it is also a great tax tool to use during your lifetime, and a wonderful provident product to reduce your everyday life.

Here is what we recommend:

Take out life insurance without a prior medical examination.
Prefer to take out life insurance when young and in good health to minimize premiums and ensure that you are insurable.
Shop for life insurance like any insurance or everyday life product. This is the only way to get the best premium for a chosen level of coverage.
Carefully check the exclusions or exceptions in the contract to be sure you get the payment in the event of death.
Do not automatically take mortgage life insurance offered by banking institutions. It is never mandatory and you can already be insured if you have purchased life insurance individually or through your employer.
Do not stop life insurance when the children are financially independent. Life insurance is the guarantee that you leave them with no debts, taxes, funeral costs, inheritance or other taxes to pay, but rather financial support when you leave. Life insurance is a great way to secure the future of your next of kin.
Explore the possibilities of insuring your spouse (and possibly your children)
Take advantage of the tax advantages that life insurance offers.
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