Every broker should discuss credit protection insurance with their clients because it could save their homes in the event of financially destabilizing tragedies.
“Typically, they’ll have a spouse or dependent and if anything were to happen to either of the parties, regardless of how much money they make—because it took both of their incomes to get them into that piece of real estate—the last thing you want to worry about is whether or not you can stay in there after your significant other passes away,” said Deren Hasip, co-founder of Mortgage Scout.
“If you’re borrowing to purchase and you don’t have the means to buy this thing outright, if something happens and your financial circumstances change for the worse, having credit protection insurance makes all the difference in the world.”
According to market research by Pollara Strategic Insights, Canadians recount their experiences with credit protection insurance quite favourably. Eighty-seven percent say it’s a convenient way to protect themselves and their families against monumental setbacks, like death, critical illness, disability and job loss.
“We don’t want them stuck in dire circumstances, especially if they have dependents beyond their immediate partner, so we always have this discussion with our clients,” said Hasip. “Our experiences are coloured by our customer’s real life experiences, some of whom have had to sell their homes because their group policies weren’t enough to cover the mortgage costs while they were in the middle of treatment, so they sold their homes because the cost of ownership was too significant.”
While young, single, high-earning clients may not life insurance, Hasip says they should still be advised of other products they could end up needing.
“With younger customers who don’t have any dependents, we steer them towards living benefits like disability insurance or critical illness insurance, and some of our lender and insurance partners offer these insurance policies,” he said.
The Pollara research also found that 71% of those surveyed believed their families would have trouble coping if an unexpected life occurrence affected their finances. Additionally, 70% said CPI is affordable.
“Every mortgage broker has an obligation to at least present credit protection,” said Hasip. “As a matter of fact, at our brokerage credit protection is mandatory to be covered with every customer, and whether they take it or not, they must be informed about it so that they have enough information to make a proper decision.”