Mortgage Disability Insurance Claims

What is Mortgage Disability Insurance in Canada?

Mortgage disability insurance is an optional type of insurance that helps cover your monthly mortgage payments if you become disabled and can’t work due to an illness or injury. It provides financial protection during a difficult time, helping you stay in your home while you recover.

Often sold by banks, credit unions, or mortgage lenders, mortgage disability insurance is typically offered when you first sign your mortgage paperwork. While it may sound like it protects you and your family, the primary purpose is to protect the lender — by ensuring mortgage payments continue if you can’t earn an income.

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What Does Mortgage Disability Insurance Cover?

Mortgage disability insurance covers your mortgage payments if you become disabled and are unable to work due to an injury or medical condition. It’s meant to ease the financial burden during a health crisis by keeping your mortgage payments on track while you recover.

Here’s how it typically works in Canada:

• Your monthly mortgage payments are made directly to the lender while you’re off work
• You must meet the policy’s definition of “total disability” to qualify
• There is often a waiting period (e.g. 30, 60, or 90 days) before benefits begin
• Payments continue for a limited time, such as 12 or 24 months

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How Much Does Mortgage Disability Insurance Cost in Canada?

The cost of mortgage disability insurance in Canada depends on a few factors, including:

• The amount of your mortgage
• Your age and health
• Whether you’re applying individually or jointly
• The coverage period (e.g. 12 months vs. 24 months)
• Whether the policy is standalone or bundled with other mortgage insurance products

In most cases, the premium is added to your monthly mortgage payment. While some policies may only cost a few dollars per month, others – especially those purchased through banks – can be significantly more expensive.

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Do I Need Mortgage Disability Insurance?

Mortgage disability insurance in Canada is not mandatory, but many homeowners choose to purchase it for added peace of mind. If you rely on your income to make mortgage payments and don’t have separate disability coverage, this type of insurance may offer helpful protection – but it’s not your only option.

Before you sign up, it’s important to consider:

• Who benefits from the policy? Most mortgage disability insurance policies pay your lender, not you.
• Is there a better alternative? You may get more flexible coverage with standalone disability insurance or critical illness insurance.
• Do you already have coverage? Some group benefit plans through work already offer short- or long-term disability protection.
• What are the limits? Most policies only cover payments for 12 to 24 months, and only if you meet the insurer’s strict definition of disability.

Tip: Always read the fine print. If your claim is denied, speak to a legal professional at Samfiru Tumarkin LLP before giving up. You may still be eligible for payment.

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Who Is Covered by Mortgage Disability Insurance?

When you sign up for mortgage disability insurance, only the individuals specifically named on the policy are covered. This is important to understand, especially for couples or co-signers.

Here’s how it typically works:

• Single applicants: If only your name is listed on the mortgage and insurance policy, only you are eligible to make a claim.
• Joint applicants: Both parties must be named and approved on the policy to be covered. If one partner is not listed, they won’t be eligible – even if they share the mortgage.
• Non-working spouses or retirees: These individuals may be excluded from mortgage disability coverage, as eligibility often depends on earning active income at the time of application.
• Self-employed individuals: Coverage may be available, but the insurer might require more documentation to confirm income and ability to work.

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What to Look For in a Mortgage Disability Insurance Policy

Before agreeing to disability mortgage insurance, it’s critical to understand exactly what you’re buying — and what limitations could come back to haunt you.

Ask these key questions:

• How long will payments be made? 12 months? 24 months?
• Is there a waiting period before benefits begin?
• Are there exclusions for pre-existing conditions or mental health issues?
• How is “totally disabled” defined – and how strict is that definition?
• Can I cancel the policy without penalty if I no longer want the coverage?

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How to Apply for Mortgage Disability Insurance in Canada

You can apply for mortgage disability insurance when you first set up your mortgage, or at any time during your mortgage term. It’s most commonly offered by banks, credit unions, or mortgage lenders, though it’s also available through private insurance companies.

The process usually includes:

1. Filling out a basic health questionnaire
2. Providing details about your mortgage balance and term
3. Confirming your employment and income
4. Selecting your coverage amount and length of protection

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Can You Collect Mortgage Disability Insurance with Other Types of Insurance?

Yes – in most cases, you can collect mortgage disability insurance along with other insurance benefits, as long as each policy is valid and the terms don’t conflict. Here’s how it typically works in Canada:

Mortgage Disability Insurance and Long-term or Short-term Disability Insurance

You can usually receive payments from both. Your employer-provided LTD or STD plan may give you income replacement, while your mortgage disability insurance covers your mortgage payments directly. One does not typically cancel out the other. Remember, one pays you, the other pays your lender.

Mortgage Disability Insurance and Critical Illness Insurance

Yes, you can receive both. Critical illness insurance pays a lump sum directly to you upon diagnosis of a covered illness (e.g. cancer, heart attack). This can be used for anything – including household bills or additional medical costs – while mortgage disability insurance covers your mortgage payments during recovery.

Mortgage Disability Insurance and Life Insurance

These don’t overlap, but they can co-exist. Life insurance pays your chosen beneficiaries if you pass away, while mortgage disability insurance only helps if you’re alive but unable to work. They serve completely different purposes and are often part of a broader financial plan.

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Why Mortgage Disability Insurance Claims Are Denied

Many Canadians only learn the limitations of mortgage disability insurance when they file a claim – and receive a denial letter in return. Unfortunately, these denials are often based on confusing language, unclear policy terms, or overly strict definitions of disability.

Here are the most common reasons mortgage disability insurance claims are denied in Canada, and how we can help.

You Don’t Meet the Definition of “Total Disability”

To qualify, most policies require you to be “totally disabled.” But insurers often define this very narrowly. If they believe you can perform any kind of work – even if its not realistic for your career or health – they may reject your claim.

• How we can help: We push back on overly narrow definitions of disability, and use medical evidence from your doctor to show why you qualify under your policy.

Lack of Clear Medical Evidence

If your doctor’s notes aren’t detailed enough, or if there’s not enough documentation to show how your condition affects your ability to work, the insurer may say there’s “insufficient proof” of disability.

• How we can help: We work with your healthcare providers to strengthen the medical evidence and ensure your limitations are properly documented.

Missed Application or Reporting Deadlines

Most mortgage disability policies have strict timelines for reporting your disability or submitting supporting documents. If you’re late – even due to illness or confusion – the insurer may reject the claim on a technicality.

• How we can help: We can review the timeline, challenge unreasonable denials, and argue for coverage based on fairness and policy interpretation.

Policy Was Inactive or Lapsed

If your coverage was cancelled, paused, or premiums weren’t paid, the insurer may claim the policy was inactive when you became disabled. This can happen due to automatic payment errors, missed notices, or mortgage account changes.

• How we can help: We investigate whether proper notice was given and whether the cancellation was valid. In many cases, we can show the lapse was not your fault.

Pre-existing Condition Exclusions

Insurers often deny claims if they believe your condition existed before you applied, even if you weren’t formally diagnosed. A doctor’s appointment, lab test, or complaint in your medical records may be used to deny your claim.

• How we can help: We examine your medical timeline and policy details to challenge unfair exclusions – and push back when insurers misuse vague pre-existing condition clauses.

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Why You Shouldn’t Appeal a Denial on Your Own

Most mortgage disability insurance companies encourage you to appeal through their internal process. But this is often a dead end.

Here’s why:

• Appeals rarely work – the same insurer who denied you the first time is reviewing your appeal
• They may use the process to run out the clock on your legal rights

Instead, talk to a disability lawyer at Samfiru Tumarkin LLP who understands how to challenge these denials successfully.

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Denied a Mortgage Disability Insurance Claim? We Can Help.

If your mortgage disability insurance claims has been denied, delayed, or unfairly reduced, you’re likely feeling overwhelmed and unsure where to turn. You paid into this policy expecting peace of mind – but now you’re left without the support you were promised.

At Samfiru Tumarkin LLP, our experienced mortgage insurance lawyers help Canadians across the country resolve denied claims and get the benefits they’re entitled to. We take the pressure off you, so you can focus on your health while we handle the legal and insurance details.

We have successfully guided thousands of clients through difficult insurance denials involving:

• Mortgage disability insurance
• Group or private long-term disability (LTD) policies
• Short-term disability claims
• Critical illness insurance
• Life insurance claims

Our firm has helped many people, like Sandra Bullock, Julie Austin, and Florence Steele, resolve their insurance disputes. We will review the facts of your situation, tell you if you have a case, and advocate on your behalf.

Get a free consultation with a mortgage insurance lawyer today. We’ll review your denial, explain your rights, and take the burden off your shoulders – with no cost to get started.