Mortgage 101 – Protecting Your Future With the Right Insurance

Dan Ahlstrand and Clinton Wilkins welcome Mario Cloutier from Manulife to explain the importance of mortgage protection, noting that 83% of Canadians are underinsured.

Dan Ahlstrand
All right. Welcome back to the Todd Veinotte Show. This is a special edition of Mortgage 101. You can hear that monthly on our radio station, right? We do it with Clinton, who has been doing it for several years. And, if you’re learning some stuff today, that’s the goal of financial literacy. The month is to, is to educate you as a consumer out there. You can go back into our catalogue, and you can look at or listen to some of the previous programs that Clinton has done with me or with Todd and and there’s always some really great information in there. We do this live show once a year in November as part of Financial Literacy Month. And Clinton, last year, we had our next guest in the studio. And he was so good, we invited him back again this year. And that is, of course, the head of mortgage creditor insurance at Manulife, Mario Cloutier.

Mario Cloutier
I feel like I have to pay some new respect to Clinton without his new titles now, mortgage guru and everything. So I’m not sure if we’re gonna have to bow.

Clinton Wilkins
That was Todd. Maybe we’ll keep that going for a while. Maybe we’ll keep that going into 2026.

<strong>Explanation of Mortgage Creditor Insurance</strong>

Dan Ahlstrand
We’ll see what we can do. Mario, tell us a little bit about what it is that you do and what creditor insurance is.

Mario Cloutier
So mortgage financing, as we all know, is the most important financial decisions of any consumers life so, where we come in is basically when, after the customers have met with their mortgage brokers, decided and figured out what their best options was to for them is we make sure that they have a plan going forward to be protected for that most important financial decision, life happens. One other Canadian consumer is going to experience a life event that’s going to require them to be off work for at least nine months during their financial life. So what happens if? What if? And I think it’s more today than ever, it’s important to have the right plan for that. So mortgage protection actually comes in, but in a situation where you wouldn’t be able to make the monthly payments, or if there was a debt in one of the spouses responsible for the mortgage, Manulife MPP would come in and take care of the mortgage during those difficult times. There are those lives.

Clinton Wilkins
Canadians are just so underinsured. And Mario, you can probably speak more to the stats. Some people have the best intentions of getting a term policy or a whole life policy. But at least in our office, when we see consumers, we’re really talking about two things. You need to protect your income, but you also need to protect the debt. Yes, you may have insurance for that. Okay, I have enough insurance to pay out my mortgage. Well, if your mortgage is gone, also if you were to die, your income is gone from the household as well. So that’s something that we really talk to consumers about. So maybe Mario, can you speak a little bit about the lack of coverage that Canadians have?

<strong>Statistics on Canadian Insurance Coverage</strong>

Mario Cloutier
Yeah, for sure, there’s a misperception, unfortunately, that all Canadians are covered through work and that the guidelines in Canada are that you’re supposed to have seven to 10 times your annual income to be able to maintain the lifestyle if something were to happen to you. Now, there’s an organization like MPC, but for the insurance world, it’s called Cafe and and they published an annual report, and then there is are 2023 annual report. They were saying that 83% of Canadian consumers are not sufficiently insured, so they have some kind of coverage. But there’s a different type of coverage. When we talk about protection for this, you can have a term life policy that’s going to be like Clinton was mentioning there, to maintain your lifestyle. If there was something to happen to you, maintain the lifetime of your family, that is. But then there are also liabilities that are associated with maintaining a property that needs to be taken care of. So, so it’s, it’s absolutely a misperception that, oh, I’ve got coverage at work. Most of the coverage we see at work, and some of the best ones, are going to be one or two or three times the annual income and that is to be times, 30, 40, 50 years ago, where people would just stay in their job for their entire career.

Clinton Wilkins
People change their employers like they change their underwear these days, I can tell you that right now.

Mario Cloutier
You’re not necessarily going to be captive of the work because you have to keep the coverage, because you need this to maintain your life. So, you’ve got to make sure that you’ve got an option that’s flexible and gives you the ability to be able to move around and financial freedom. I’m using terms from competitors, but it’s all about financial freedom.

Dan Ahlstrand
Mario, you mentioned seven, eight times your annual income. Do you do it in your experience? Do you do employer policies? I’m thinking about ours, and I don’t think that we even have the option to get insured that much.

Mario Cloutier
Yeah, I think the best solution for any consumers, when they have some kind of coverage, is to consult with a mortgage broker and financial advisors. Financial Advisors will do a needs analysis and assess how much coverage you have. I wouldn’t dare to speculate on that. Most of what we see these days. And that doesn’t necessarily apply to every consumer, but it’s probably going to be two to three times the annual income, which is still really generous.

<strong>Multi-Pronged Approach to Insurance</strong>

Clinton Wilkins
I think it needs to be a multi-pronged approach. Yes, hopefully you do have some coverage through work. Hopefully, you also have your debt coverage through a product like MPP that we offer. And I think on top of that, you do need to have some term or whole life insurance. You just don’t need one. You need all, and those are the consumers who are really protected and getting the best advice. They have a mortgage broker who’s looking after their mortgage debt and the mortgage coverage. They also have a financial advisor who’s making sure that they have the term and the whole life, a nd people are also opting in at work, like it’s really a three-pronged approach, I think those are the consumers that really are getting that best advice and having that best level of coverage.

Mario Cloutier
You’re absolutely right about investment. Financial investment is a principle that you have to do a diversification at risk, so don’t put all your eggs in the same basket. This principle is also applicable for insurance, and Clinton’s absolutely right, and the mortgage brokers are the best people when it comes to transactional, so obviously, talk about what happens to keep up, to keep the lights up, and in the day-to-day, how much money is left in my pocket. So obviously, go to a mortgage broker. But mortgage brokers often partner up with financial advisors to get a more holistic approach for that.

Clinton Wilkins
I see customers in my office all the time who have whole life and term policies, and they’re and they also want the credit insurance because they are taking the advice that they want to have that level of coverage. And oftentimes, people who are also getting advice elsewhere, they don’t want to have all their eggs in one basket, and maybe their term, or their whole life is is coming up for renewal, and they want to make sure that that mortgage is being covered and that there’s no gap in that coverage.

Dan Ahlstrand
It’s really a big picture, right? Because I’m sitting here thinking in my mind, like, if I’m able to put together enough money for my for my down payment of my 30 year amortization, the grocery store prices are expensive, taxes, all of that thing, all of those things included, it would be pretty easy for me to kind of skimp on the insurance, right? Because we got bills to pay.

Clinton Wilkins
Well, sometimes it’s the first thing to go, but it’s the most important thing. Like, I’m just going to give an example. So many times, I see consumers, even in a refinance type scenario, where they need every dollar of income for these customers to qualify, we need both incomes if something happens to one of them from a disability standpoint, or if there is a death, they are ruined financially. Their only way out of their financial situation is to sell the home. But the last thing that you want to have to worry about if you are going on disability, or if there was a death, the last thing you want to worry about is needing to change your housing situation, especially in this housing market as, to be able to sell a home and to be able to get even into an apartment or buy a smaller home. It’s very, very challenging.

Mario Cloutier
And one thing to mention about creditor insurance as well is that coverage is going to follow you throughout your financial life. It’s not something that has to be renewed every two, three years. I mean, earlier on in the show, you were talking about the fact that what’s the best time to purchase a property? And it was yesterday. It’s the same thing for insurance, as you get the insurance coverage younger, first-time homebuyers going to get their mortgage insured and everything, and then they go in there for the coverage, because it’s based on your age, obviously, it’s going to be much cheaper than if you get coverage later in life. So people tend to procrastinate and wait till they’re 4050, and have more financial independence, but really, the best time to get coverage could be as low as a few dollars a week.

Dan Ahlstrand
Is it really expensive? Because when you’re 25 or you’re 30, and you’re buying a house, and you’re not necessarily in the best financial situation. Is it expensive to get this kind of insurance?

<strong>Importance of Insurance in Financial Planning</strong>

Mario Cloutier
No, it’s not. And so it’s based on two things. Is your age number one in your health condition? So it has nothing to do with your credit rating or anything else. It really is on your health, like any kind of insurance product. And in the market like Halifax, where the average mortgage size is maybe smaller than in Toronto, Vancouver, it’s even cheaper. So you’re looking at a few dollars weekly.

Clinton Wilkins
Really, is a product that you can’t ignore. And I’ll just reiterate, so many Canadians are underinsured. Some people don’t believe in insurance, but I get the calls. We have over 40,000 customers, and I get the calls when people are going on disability, and I get the calls when people pass away. I like being the good news person, and we are very optimistic. About 40% of our customers are taking insurance, but it should be much more, because I get the calls, and sometimes I have to tell people, well, you actually waive the insurance, and that’s not a great conversation to have. And sometimes people are like, well, I don’t have an extra $100 a month. Well, you can’t afford to spend the extra $100 a month, really. You would never have not you would never not have insurance on your car. Why don’t you want to have insurance to protect your financial health?

Dan Ahlstrand
Mario Cloutier, the head of mortgage creditor insurance and ManuLife, we’re going to take another break here. Clinton’s going to stick around as we go through this live edition of Mortgage 101.