Insurance on Your Debts

Insurance for your debts may make payments on that debt in the event that you are unable to, due to illness, accident or death.  People often refer to this type of insurance as creditor insurance or credit protection insurance, because it pays benefits to the company that you owe money. Usually the insurance product covers one specific debt, such as a mortgage, line of credit or a loan.

Be aware that it often has exclusions relating to pre-existing conditions, such as asthma, high blood pressure or heart disease. Read your policy carefully and make sure you know what is and is not covered.

Things to consider before you sign up for insurance on your debts:

  • Review your existing insurance coverage ó for example; you may already have insurance coverage through your employer that will help pay off your debts in case of death or a disability.

  • Compare the coverage offered with other options, such as a term life policy, to see which option meets your needs and offers the best value.


Source: Understanding Insurance Basics, page 2-27, Financial Consumer Agency of Canada, 2012. Reproduced with the permission of the Commissioner of Financial and Consumer Agency of Canada, 2013.  

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