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Desjardins uses the principle of percentage points of interest to express the insurance premiums. In other words, the monthly insurance premium is not represented in a fixed amount to be paid monthly but rather in percentage of interest to be added to that in force at the signing of your loan.
Although this method has no impact on the amortization of the loan, principal repayment of the mortgage is at a different pace. Indeed, plus interest, the lower the monthly payment is allocated to the capital of the mortgage. This means that if you decide to change financial institutions to finance your loan along the way, you will not have reimbursed as much capital on it if insurance premiums were not calculated according the method previously explained. The amount of the mortgage you have to finance at that time will be higher.
In addition, insurance premiums are recalculated according to the three following scenarios, when you renew your loan, when you recall it, or after a maximum period of 10 years. Thus, if the mortgage has a term of 5 years (closed on 5 years), the insurance premium will be recalculated after these five years. That is why it is important to remember that insurance premiums rise with age. And therefore, there will be a reassessment of the premium, and therefore an increase in the price you pay for each dollar of insurance after a maximum of 10 years.
It is important to distinguish what is the purpose of life insurance coverage compared to disability insurance. With Desjardins, life insurance will compensate the balance of your mortgage in case of death. Life insurance (and therefore the premiums as well) is decreasing in function of the remaining capital, and therefore, only the balance of the loan is insured.
In the case of disability insurance, it is the monthly payment that is protected in case of loss of income related to a disability. Let's see how the principle of reassessing the premium applies here.
Thus, at the next renewal, or recall, or after a maximum period of 10 years, the premium will be recalculated. Unless there is a major change to lower interest rates, your monthly payment will not decrease significantly, and even if the loan balance is less.
Why is this important?
Because the monthly payment on the mortgage, and therefore the amount to be insured for disability, remain relatively stable throughout the period of the loan. But age, will increase at each reassessment of the cost of the premium. In other words, protection in case of disability remains stable, while its cost is increasing. Over 25 years, the borrower will see their premiums increase to at least twice. It would therefore be particularly advantageous to choose a product called "leveled" in which the premiums would not increase throughout the term of the loan. InfoPrimes counselors can guide you to solutions tailored to your needs, and that will achieve significant savings in the long run.
An important aspect to consider when it comes to take out disability insurance with products offered at the Caisse Populaire Desjardins is called the "usual occupation" clause. With Desjardins, its duration is 24 months. To be clear, if you are not able to resume your normal work after 24 months of disability, the insurer will verify that you are able to perform "any gainful employment", which ensures a "equivalent quality of life".
For example, if you are a nurse and that after 24 months the insurer determines that you could hold a job of telephone operator, you are declared fit for work and therefore ineligible for any insurance benefit.
How is this possible?
In general, Desjardins considers an income equivalent to 60% of the salary of the insured before his disability will provide an equivalent standard of living. So if your pre-disability income was $ 50 000, your insurer would be in the right to discontinue contributions related to your disability at 24 months, if you were able to occupy a position with an annual income of $ 30 000.
To help you judge the different options available to you, InfoPrimes offers a mortgage insurance calculator. You can compare Desjardins’ monthly cost to several other life insurance companies.
|Desjardins||Infoprimes||Savings After 25 Years|
|Husband and Wife, 30 years old, non-smokers
Mortgage life and disability insurance. For a loan of $ 250 000, 3.5% interest rate.
|$ 90.57||$ 43.38||$ 16,999.20|
|Husband and Wife, 53 years old, non-smokers
Mortgage life and disability insurance for a loan of $ 150 000, 3.5% interest rate.
|$ 272.17||$ 119.95||$ 54,799.20|
No. According to Article 439 of the Act respecting the distribution of financial products and services :
“A distributor may not require the entering into of a subordinate contractual obligation for the customer to enter into a contract of insurance with the specified insurer. He may not exercise undue pressure on the client or use fraudulent tactics to induce him to purchase a financial product or service.”
Note that, under certain circumstances, financial institutions may ask you to obtain mortgage life insurance before they approve a loan. However, they cannot force you to obtain that insurance from their financial institution. See Article 22.
If your loan is for commercial or rental property and you have written confirmation which confirms that this life insurance (not applicable to disability) is required for acceptance of the loan, your premiums will be tax deductible under certain conditions. See Article 20-1 E.2.
Before you sign up for insurance with Desjardins, seriously consider all of the options available to you. The eligibility criteria and contract terms are not the same for mortgage life insurance and disability insurance mortgage, depending on whether you do business with Desjardins or InfoPrimes. The differences are worth your attention.
|Who owns the contract ?||Desjardins||The owner of your choice.|
|What type of insurance is available ?||Group||Individual|
|Will I receive a contract ?||The insurance policy is available at the financial institution||Yes|
|Eligibility||Any new loan from Desjardins.||Any loan from a financial institution or recognized organization providing for a minimum payment over a fixed period of time. *Even if they are different and there is more than one.|
|Can I change my mortgage lender and keep my insurance ?||No||Yes|
|Who receives the benefit ?||Desjardins||The beneficiary of your choice (spouse, children, etc.)|
|How much is insured ?||The total amount owed||Your Choice|
|Are premiums guaranteed ?||No. Also, the premium is expressed as an additional annual interest rate applied to the net debt. When it’s renewed, the premiums are revised based on the age of the loan||Yes|
|Is there a tax payable on the premium ?||A provincial tax is applied in Quebec (9%) and Ontario (8%). There are no taxes in any other provinces.||No. This is an insurance premium of individual persons, so the tax doesn’t apply.|
|Can term insurance be converted to permanent insurance ?||No||Yes|
|Do I pay my premiums with my mortgage payment ?||Yes||It’s up to you|
|If I don’t pay a mortgage rider, does this end my insurance ?||Yes, in most cases at the end of a period of six months in which you have not paid at least one twelfth of the payments required for the entire year.||No, because your insurance and your mortgage are not linked together|
|Can people who aren’t on the mortgage be insured ?||Only the borrower's spouse, and the borrower's guarantor||Yes|
|Is the pricing based on tobacco usage?||Only for amounts higher than $ 150 000||Yes|
|What is the maximum age at which insurance can be purchased ?||69, (and depending on your health if your loan's capital is more than 250 000 $)||85, depending on your health.|
|At what age does the insurance end ?||At the time of the first reminder or renewal after reaching the age of 70.||Your choice|
|What is the maximum amount of life insurance ?||$ 10 000 000||Unlimited|
|What happens in the case of multiple insured parties who die simultaneously ?||Each party is treated individually. The insurer can pay more than the loan balance||You receive the total amount that you chose at the beginning (eg, $ 200 000 per person).|
|Can I get disability insurance without buying life insurance ?||No||Yes|
|What is the maximum age at which insurance can be purchased?||64 years||59 years|
|What is the maximum amount of disability insurance ?||$ 7 500 / month||$ 5 000 / month|
|Class of Occupation||Not available.||Depending on your occupation, generally better.|
|Can I choose the percentage of the payment that is protected ?||Three choices are offered: 50%, 100%, or 150% of the payment amount.||You get to choose, and can even add other loans.|
|How long do I have to be disabled in order to make a claim?||90 days retroactively to the 31st day (total disability). In cases of accidents or in case you have been hospitalized for at least 72 hours, 31 days.||You choose between 30, 60, and 90 days.|
|What is the maximum disability time permissible ?||As long as the total disability lasts, or at the reimbursement of the loan (maximum at 70 years of age)||You choose: 24 months, 60 months, or until you reach age 65.|
|Preexisting conditions (Conditions for which you have consulted with or been treated by a doctor)||If a disability occurs within six months of the start of the contract as a result of a preexisting condition, no benefit is payable.||The risk selection is made at the start of the contract. No exceptions to coverage..|
|Own-occupation (which prevents the insured from engaging in all remunerative work))||24 months||Depending on your occupation, it may vary between 24 months, 60 months, or until you reach age 65.|
|What happens in the case of two insured persons simultaneously becoming disabled ?||Each party is treated individually.||You choose|
|What is the maximum age at which insurance can be purchased ?||Not available||64 years|
|Can I get critical illness insurance without purchasing life insurance?||No||Yes|
|What is the maximum amount of insurance ?||Not available||You choose|
|What diseases are covered?||Not available||You choose between 24 diseases.|
Yes! You may cancel your insurance with Laurentian Bank at any time without being penalized. There is no need to wait to renew your loan—you can start saving now!
Individual mortgage insurance, like all contracts offered by InfoPrimes, offers many advantages when compared with the group insurance products offered by most financial institutions. Not only will you have better protection, but the price of our insurance is often cheaper!
If you want to change your insurance to InfoPrimes, rest assured that you can cancel your mortgage insurance with Desjardins at any time without being penalized.
WARNING: It is important that you keep your current insurance in effect until your new policy is accepted, issued, and in force.
To help you plan your purchase and all of the related fees, InfoPrimes offers a mortgage insurance calculator. You are able to compare InfoPrimes’ insurance rates with many other banks, including Caisse Populaire Desjardins.