Harsh Realities: The Importance of Mortgage Life Insurance

          I believe that sometimes a person can be over-insured, but in relaity I feel most people are just the opposite.  When I first discuss insurance I tell clients this is a very good exercise because they need to assess where they are at when it comes to their insurance needs. This exercise forces people to evaluate their lives and to make sound financial decisions.  This idea was reinforced last year when two of my mortgage clients faced a harsh reality: 

          The first instance occurred the first week of January 2010, when I arranged a refinance, putting the clients in a good financial position. The applicant had been laid off for a considerable amount of time in 2009 and he was especially relieved at the reduction in personal financial pressure. At the time, part of the pressure he felt came from the recent arrival of their new baby.  Both clients were in their twenties.  Using the equity in their home, the refinance paid off every single debt, along with the original mortgage. Tragically, only two weeks later, the husband was killed instantly in a snowmobile accident.  The mother (co-applicant) was left with an infant child while still off on maternity leave.  Although grieving the loss of her husband, she was at least in control of all financial responsibilities, because Canada Life Insurance paid off the lender, First Ontario Credit Union, in short order.

          The second instance was during the spring of 2009, a husband and wife, again with a one year old infant, who purchased in 2007.  They were all relaxing together on their front lawn when the mother forgot that she needed milk to feed their baby.  On returning from the store, she lost control of the car and actually hit a tree on her own property, causing her death. In addition to the grief the husband was experiencing, he was having financial problems due to a lay off from work. The wife had been the only source of income at the time of the accident.  The mortgage insurance was the saviour in this family’s tragedy.

          The truth is, none of us can predict life’s physical and emotional challenges, but these two couples were able to protect their families, not by gambling, but by protecting themselves with mortgage life insurance.