Contractors beware: Mortgage insurance claims can be denied

Most self-employed contractors lack pensions and health benefits, presumably praying that their business could be sold in the event of their untimely early death. But, realistically, without the founder and owner at the helm, would their business have much value to a potential buyer?

Well, OK, you might think. My business may not sell for much if the unthinkable occurred, but at least the remaining mortgage on our family home would be paid off by the mortgage insurance that we purchased through our bank. That’s something, right?

Well, think again. Your mortgage might not, in fact, be paid off according to a recent episode of CBC’s consumer protection show Marketplace.

As the show’s Erica Johnson reports, “The bank staffers selling mortgage insurance are unlicensed and rarely trained to explain the details and legalities of those insurance products. The result is people who pay premiums and think they are covered, only to realize later that they are not.”

The Marketplace investigation met families who bought coverage and thought they were protected, only to have their claims denied when their breadwinner got sick or died.

Since this program first aired it seems nothing has changed at the banks and it’s business as usual. Many customers remain unaware of the perilous situation the banks are putting them in.

Check out the video for yourself (view program). If, after watching this, you decide to seek better protection for your family, you can do this very easily by contacting an independent insurance adviser or broker. One such organization around is the Independent Financial Brokers of Canada.

If you reside in Ontario, CARAHS have their own qualified independent insurance brokers, licensed through the Financial Services Commission of Ontario and they are trained specially in this mortgage insurance area. Membership of CARAHS is not a requirement to participate. Contact Monica our senior specialist Toll free 1 866 366 2930

CARAHS is a non profit origination for self employed renovators and home services EDUCATION – TRAINING – BENEFITS        We now have 66 online Safety courses at carahs.org.