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Canadian woman's life was not insured despite a line of credit

An Ontario man found out that his wife's life was not insured despite a C$150,000 loan.
Canadian woman's life was not insured despite a line of credit

Richards said he and his wife Sandra wanted to take out a Home Equity Line of Credit (HELOC) for $150,000, but they said they also wanted to have life insurance on the loan.

HELOC (Home equity line of credit) is a line of credit secured by residential real estate. It is one of the types of mortgage lending, in which the lender undertakes to provide the maximum loan amount for a certain period secured by existing real estate. In other words, an agreement between the lender and the borrower is concluded, under which the latter’s property is pledged to the bank (or another lender) in exchange for the fact that the borrower will be able to use credit funds at any time, the maximum amount of which is determined based on the value of collateral and characteristics of the borrower. The borrower, in turn, can take the entire amount or part of it, and they (the borrower) can use the credit line (take funds and give them back) repeatedly during the period specified in the agreement. Some experts see HELOC as a “salvation” for borrowers who have obtained many loans from various banks and microfinance organizations.

But when Sandra died in November of 2023, Richards found out the line of credit was not covered by life insurance. Their bank has a policy to terminate life insurance when a customer turns 70 years of age. This means that after this age, banks or insurance companies no longer provide insurance coverage related to the repayment of loan obligations in the event of the death of the borrower.

“I had no idea such discrimination existed. We were paying almost $800 every month. And I assumed that these costs were included paying premiums to the insurer. Now this amount will have to be paid by me alone, but my income does not allow this,” Richards commented.

Source: https://toronto.ctvnews.ca/ontario-man-devastated-to-learn-150-000-line-of-credit-isn-t-insured-after-wife-dies-1.6877914

Photos are from open sources.

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