What is debt insurance? Debt insurance is never called debt insurance, it’s called mortgage insurance, balance protection insurance, and other names. Essentially this insurance is to pay back your creditors in the event of your death or life-threatening injury or illness, depending on the specific coverage. Debt insurance has more benefit for your creditors than it does for you, and here’s why: it’s expensive, the monthly premiums do not go down although the coverage does as the debt decreases over time, and it pays only that creditor for that specific debt. Of course it benefits you too if that is your only insurance option, but it isn’t.
Insurance is a hot topic once again. Hot for all of the wrong reasons. Many people have heard about a number of claims under travel insurance policies that have recently been denied by Canadian banks. I say many people because I couldn’t find the story quickly on the internet. It didn’t seem to get a lot of coverage in the local newspapers either. It’s a good thing I watch the news on television.
One case involves the CIBC where a 69 year old senior bought travel insurance and paid an extra $100 premium to make sure her insurance would cover her high blood pressure – and after getting sick abroad and then filing her claim, the bank denied her claim.