all about borrower insurance

All About Borrower Insurance

After you have selected your property and negotiated your financing, your advisor will speak to you about loan insurance. Find out everything you need to know about borrower insurance.

What is borrower insurance?

Insurance on a loan. In the event of a financial setback, this insurance will protect you by covering your loan. Depending on the situation and policy, the insurance will repay your monthly loan installments (in the event of unemployment or incapacity to work) or will repay the outstanding capital (death or disability).

Borrower insurance is vital for protecting you and your family in your real estate project.

Although it is not legally mandatory, taking out insurance is a key condition for obtaining a mortgage loan.

In general, borrower insurance consists of the following basic coverage:

  • death
  • total and irreversible loss of independence
  • total and permanent disability
  • total temporary incapacity to work

Certain policies cover even more risks, such as loss of employment. Therefore, it is important that you study the offerings that will best fit your situation.

Carefully read the coverage exclusions. These exclusions, listed in your policy's general terms and conditions, specify the cases in which you will not be covered.

Borrower insurance only lasts for the duration of the loan. Depending on the bank, it will start when the loan is approved or the funds are released, and will end when the loan is entirely repaid or within the limits specified in the insurance policy (age limit, for example).

How much does it cost?

In general, your insurance premium depends on:

  • the coverage and insured portion(1) chosen
  • the type of loan amortization
  • your age and the term of your loan
  • your socio-professional category
  • your health status
  • your potentially risk-incurring activities (sports, profession)
  • whether or not you smoke

Your insurance premium is most often expressed as a percentage of the amount borrowed or as a percentage of the outstanding capital.

When should I get it?

Our advice: don't wait until you receive your loan. It's better to do it early. You will probably not be able to have the funds released to you or obtain a signature from a notary without insurance.

Start gathering information about borrower insurance as soon as you begin looking for financing for your real estate project.

From where should I take out the insurance policy?

You can sign up for borrower insurance directly from your usual bank advisor. In most cases, your bank will offer borrower insurance to you to cover your loan agreement.

You are free to take out any borrower insurance you choose, as long as it offers a coverage level that is at least equivalent to the insurance offered by the bank. If not, the bank might reject the loan insurance you have submitted. The bank must specify the reason for this rejection in a manner that is "written, dated, explicit and in accordance with best practices." For more information, discover the criteria for assessing insurance coverage equivalence.

You can switch borrower insurance within a year after you take it out, if the new insurance policy has an equivalent level of coverage.

(1) The insured portion is the percentage of the borrowed capital covered by insurance for each borrower.

Have a question?

Our advisors are here to assist you.

Contact us

For assistance or to make a claim/contest a charge, your advisor can be reached on their direct line (a standard rate call).