Mortgage Blog

First-Time Home Buyer’s Guide to Insurance in Canada

March 22, 2021 | Posted by: Debbie Belair

Just when you thought the hard part was over (house searching) comes a slew of paperwork to consider. What is mortgage insurance? What is title insurance? Fire insurance? Let’s dive in.

Note* We are not insurance providers or insurance brokers. This article is intended to provide a high-level guide to the insurance options available to homeowners. Please consult your insurance provider for details about your specific needs.

What is Mortgage Loan Insurance?

Mortgage Loan Insurance is required on any mortgage whose down payment was less that 20%. If you put less than 20% down on your house, you likely had CMHC’s mortgage loan insurance added to your mortgage and included in your payments. One incentive to saving a 20% down payment is that you won’t need to add this expense, but if you’re short on your down payment don’t sweat it because entering the real estate game as early as possible is still a win. Unlike other insurance products that are designed to protect you, this insurance protects your lender and Canada’s housing market during economic slumps.

What is Home Insurance?

Home Insurance is a form of property insurance covering you for accidents that lead to your property being damaged or stolen. Liability insurance covers you in case an accident on the property results in a legal suit. We partner with simplinsur because they are the best in the business at finding very low rates and complete coverage for home owners.

What is Title Insurance?

Title insurance covers survey issues (legal boundary issues), title fraud (identity theft leading to title transfer), legal use of a property or zoning problems, public record errors, encroachment issues, legal coverage defending your property’s title. Your lender will require, in the closing costs on closing day, that you pay for lender’s title insurance. Talk to your lawyer during your signing appointment for specifics on their title insurance but typically speaking they should choose a policy will protect both the lender and you from any losses that could come up if the property’s mortgage is invalid due to a title issue. Aside from your lawyer, a great place to start your research is FSCO, here’s their brochure.

What is Life Insurance?

Life insurance provides a payout to a beneficiary in the event of your death. Typical Life Insurance will pay an agreed upon amount direct to your beneficiaries. Typically Life Insurance has an arduous process to obtain including various health tests or nurses at your door requiring urine samples.

What is Mortgage Life Insurance?

Mortgage Life Insurance will pay off your mortgage in the event of your death. A key difference between Life Insurance and Mortgage Life Insurance is how easy it is to obtain. Usually just a quick health questionnaire, a signature and you’re insured whereas it can take months worth of medical checks and health interviews to obtain traditional Life Insurance. You may have been offered Mortgage Life Insurance by your mortgage broker/agent, that’s because we are required (by law) to offer it to every client. To learn more about Mortgage Life Insurance and how it differs from term or whole life insurance visit

Money Saving Tip: Once a good portion of your mortgage is paid off and you’re that much closer to being mortgage free, you should be able to call your Mortgage Life Insurance provider and negotiate smaller premiums. This is possible because unlike traditional Life Insurance (which provides a payout regardless of debts), Mortgage Life Insurance pays off the remaining amount on the mortgage so your beneficiaries don’t have to worry about payments in your absence. Since your mortgage is smaller, Canada Life is usually happy to reduce premiums – just ask!

What is Critical Illness Insurance?

Critical Illness insurance provides coverage for medical emergencies like heart attacks, stroke or cancer. Health complications like these are life-altering and the right coverage can help alleviate the costs involved with coping with your illness. Costs include things like lost income, extra home-care, new medical treatments or medications not covered by other insurance plans.

What is Disability Insurance?

Disability insurance provides a monthly income if you’re unable to work due to serious injury or illness. You may have long-term disability insurance through your employer? Typically speaking, that is comparable to disability insurance. It replaces a certain percentage of your income for the duration of your disability.

Insurance can be tricky to navigate, but it’s in your best interest to research and choose the best fit for your family. I recently had a run-in with an insurance provider where I learned I was overpaying for a number of years. That’s money I’ll never get back. Learn my insurance savings story here and keep informed!

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