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Mortgage Insurance<\/strong><\/p>\n Mortgage insurance is insurance that covers the dollar amount of your mortgage, in case you default. If you were to die or become seriously ill and unable to pay your mortgage, mortgage insurance would pay off the remaining balance of your mortgage.<\/p>\n In Canada, every mortgage that is purchased with less than a 25% down payment is required to carry mortgage insurance. The majority of this insurance coverage is provided by a Crown corporation called Canada Mortgage and Housing Corporation, or CMHC.<\/p>\n In the past year, approximately 45% of all home buyers in Canada were required to buy mortgage insurance, a total of 1.6 billion dollars worth of insurance.\u00a0 Typically the cost of this insurance is rolled into your monthly mortgage payment so there are no added premiums to pay.<\/p>\n Mortgage insurance allows you to buy a home with a down payment of as little as 5%, which is a real advantage, particularly for first time home buyers, who may be just out of school or trying to get out of the rut of paying rent.<\/p>\n Home Insurance<\/strong><\/p>\n There are several different types of home insurance.<\/p>\n Comprehensive Home Insurance.<\/strong> This type of insurance covers your home and its contents for all risks that are insurable.\u00a0 The exception would be certain natural disasters that are uninsurable.<\/p>\n Basic Insurance.<\/strong> This is also known as named perils insurance since it allows you to specify the types of hazards you want the insurance to cover.\u00a0 This is a cheaper option, but also results in lower levels of coverage.\u00a0 This type of coverage may be appropriate for a cottage or other vacation property.<\/p>\n Broad Insurance.<\/strong> This type of insurance is a combination of comprehensive and basic coverage. For example, you may have comprehensive coverage on the building itself and basic coverage on your belongings.<\/p>\n No Frills Coverage.<\/strong> This is a plan for properties that are otherwise uninsurable, usually due to a problem with the physical structure of the building.\u00a0 This might include a barn or other structure that doesn\u2019t meet current building code requirements.<\/p>\n Life Insurance.<\/strong> Is a contract between an insured\u00a0(<\/a>insurance policy holder)\u00a0and an\u00a0insurer or assurer, where the insurer promises to pay a designated\u00a0beneficiary\u00a0a sum of money (the “benefits”) in exchange for a premium, upon the death of the insured person. Depending on the contract, other events such as\u00a0terminal illness\u00a0or\u00a0critical illness\u00a0may also trigger payment. The policy holder typically pays a premium, either regularly or as a lump sum. Other expenses (such as funeral expenses) are also sometimes included in the benefits.<\/p>\n![\"CMHC](\"https:\/\/auburnbaysetonhomes.com\/wp-content\/uploads\/2014\/06\/Mortgage-Life-Insurance-Umbrella-.jpg\" "\\"\\"")
<\/a>Mortgage insurance allows people with limited savings to buy a home earlier by guaranteeing the full amount of the mortgage.\u00a0 This way, the lenders essentially carry no additional risk that the home owner will default or the loan as a result of injury or death.\u00a0 Buying a home without mortgage insurance requires a much larger down payment which many people simply can\u2019t afford or would have to save for several more years to acquire.<\/p>\n<\/a>Home insurance, on the other hand is insurance that you buy to cover the replacement cost of your home should it be damaged by fire or other accidents.\u00a0 Home insurance also covers the replacement cost of your belongings should they be damaged or stolen.<\/p>\n