Why you need to update your life insurance when moving
Moving can be a stressful time for anyone, but failing to remember to update your insurance providers with your new location could have consequences with your coverage. Find out why it's important to keep your insurers in the know.
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When you’re thinking about moving, the last thing you want to do is add more stress to your life, so life insurance is probably the furthest thing from your mind.
But moving is the perfect time to update your policy, or get a new policy altogether. Whether you’re purchasing or renting a property, you’ll want to ensure that should anything happen to you, your costs of residence will be covered.
Because your cost of living will change when you move, you will want to ensure that, in the event that something happens to you, your dependents will be able to cover any outstanding expenses you may have incurred. By having the best life insurance coverage in place before you move, can free yourself of at least one stress involved in the transition.
Insurance for renters
If you’re moving from one rental home to another, you should of course update your renters insurance (also known as tenants insurance), as your new space may require more or less coverage than you currently have. This will depend on a number of factors, like the cost of the residence you’re renting, the neighbourhood, and security of the building, to name a few.
However, it’s also important to review your life insurance coverage as well. If you were to die, your dependants will lose access to your current income, which could result in them not being able to pay rent. Making sure your life insurance is enough to pay your new cost of living means your family won’t be left out in the cold – literally – if you died.
In any case, you’ll need to notify your insurance providers of your change of address. This is also a great time to compare home insurance quotes to make sure that you’re getting the best price, as your location is a rating factor when calculating premiums. You may be able to find a better price with another insurance company.
What’s is mortgage insurance?
Before we go on, it’s important to explain mortgage insurance (also known as CMHC insurance). It’s one of the most common types of insurance for homeowners, and it’s sometimes mandatory!
When you take out a mortgage, your lender needs to ensure their loan will be repaid should anything happen to you. For such instances, there exists mortgage insurance. Mortgage insurance, like mortgage life insurance, is a policy where the lender will be listed as beneficiary. Mortgage insurance ensures that if you default on your loan, the lender will be protected.
If you are putting a down payment of less than 20% on your property, you will be required to purchase mortgage insurance, while if the property you are purchasing costs more than $1 million, mortgage insurance will be unavailable to you.
The alternative to mortgage insurance is a normal life insurance policy that has a high enough death benefit to cover any outstanding debt in the case of your death.
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New house, new mortgage
If you’ve bought your first house, or are transitioning from a second or third home, your level of debt will most likely change, as you’re likely to need a new mortgage. With this new debt, you’ll want to revise your life insurance policy to ensure that, in the event of your death, your family will have the financial means to cover the cost.
If you purchased mortgage life insurance on your old loan, you’ll lose that coverage when you switch to your new mortgage. When your lender or loan changes, your old policy will cease, and you’ll need new coverage.
To ensure you have the proper coverage, you’ll need to add a mortgage life insurance policy to your new mortgage, or take out a separate life insurance policy to cover the new mortgage debt. The latter is often the better option, generally offering more flexibility and cheaper rates. To see what’s available to you, compare life insurance quotes today.
First time homeowners, take heed
If you’re moving into a new home, and are getting a mortgage for the first time, there are many factors to consider. After you’ve found the best mortgage to suit your situation, you’re not only going to have to consider how you’re going to pay for your home, but also new factors like home insurance.
If you’ve previously rented your residence, hopefully you had the place insured. When you’re transitioning to a place that you have purchased, you’re presumably going to have a larger space, and therefore will have to pay more for your policy. And let’s face it: you’re new home is going to be one of the most expensive things that you own. You’ll want to make sure that you have your property protected.
As examined above, a mortgage life insurance policy can ensure that, in the event of your death, your mortgage will be taken care of. If you decide not to go for such a policy, you’ll still want to ensure that your life insurance can help cover the outstanding balance of your mortgage should anything happen to you.
As a renter, your tenant insurance policy should provide contents insurance for your residence, while the building owners insurance will cover the building itself. As a homeowner, you’re going to need to have your own coverage for the building, in addition to the contents. This will cost you more than your renters insurance, but will provide you with some peace of mind should anything happen to your property.
The bottom line:
Moving can be a highly stressful time. The more you can prepare yourself for the unexpected, the better off you’ll be. By ensuring you have the appropriate insurance in place beforehand, and that your mortgage will be taken care of should anything happen to you, the better off you’ll be.
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