by Glenn Cooke
Looking for CIBC Mortgage Life Insurance? Know what you’re buying – we’ve read the contract and here’s what you need to know:
Ages 18-65, policy terminates at age 70.
Maximum coverage amount: $750,000.
You may cancel the coverage at any time by calling CIBC. (Note: never cancel life insurance until you have sufficient replacement life insurance in force).
• The date the mortgage is paid in full or discharged.
• If your mortgage principle increases.
• When you refinance your mortgage.
• At age 70.
• The date that the group policy terminates (note that you do not control when that policy terminates.).
This means that your coverage expires when every time your mortgage renews or if you switch mortgage providers.
This is group mortgage life insurance between CIBC and Canada Life (the insurance company), so CIBC bank owns the policy.
The beneficiary of the life insurance is CIBC (not your named beneficiaries or family). Any claim amount is used to pay down the mortgage – but may NOT pay off the full amount.
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Underwriting is generally a series of yes/no questions. However, no underwriting (evaluation of your ability to qualify for coverage) is done when you apply. Instead, CIBC uses what is known as post-claim underwriting. This means that they review your application after you die, in order to determine if you actually qualified for coverage. If they find that you did not qualify, then your claim is denied.
In addition, if you have two people insured with CIBC mortgage life insurance they will pay only one claim. This means that if two spouses are insured for the same mortgage, then you’re paying for two people to be insured but only one death claim will be paid.
Maximum coverage is $750,000. If your initial mortgage amount is higher than this amount, your coverage is maximized at $750,00. In addition, as you pay down your mortgage, the initial coverage percentage is maintained (and thus, your entire mortgage may not be paid off if you die, even if your mortgage has dropped below $750,000). For example, if your initial mortgage is $1,000,000 and you choose $750,000 of coverage, then at the start you are covered for 75% of your $1,000,000 mortgage. However as you pay down your mortgage, the mortgage life insurance coverage percent remains constant at 75% - even if your outstanding mortgage balance drops below $750,000. So if you pay your mortgage down from $1,000,000 to $750,000 and then die your life insurance will not cover you for $750,000 – instead it will cover only 75% of the $750,000 outstanding balance, or $562,500. This leaves your family with a $187,500 mortgage after your death despite having mortgage life insurance.
Your coverage is not level. Instead it declines along with your mortgage balance.
Premiums are level over the term of your mortgage (often 5 years, if you’ve selected a 5 year term mortgage rate).
Provincial sales tax is also added onto your premiums.
Premiums will increase with age at the time of new mortgage applications, as well as requiring a new medical application.
Link to the CIBC mortgage life insurance certificate of insurance: https://www.cibc.com/content/dam/cibc-public-assets/personal-banking/insurance/documents/cibc-ins-creditor-insurance-mortgages-cert-13001-en.pdf