The majority of Canadians who have credit protection insurance (CPI) on their mortgages and home equity lines of credit (HELOC) find it is a convenient way to protect themselves and/or their families against major financial setbacks arising from death, disability, critical illness, or job loss.
This type of insurance, also known as creditor's insurance, is used to pay off or pay down a mortgage or HELOC, or to make debt payments in the event of death, disability, critical illness or job loss. Coverage is typically secured through the financial institution providing the consumer's mortgage or HELOC financing.
CPI an affordable insurance option
According to the survey, 83% of Canadians with CPI coverage say it is an effective way to protect themselves and their families from unexpected life occurrences. In addition, 71% say that without CPI, they don’t know how they and/or their family would be able to cope should an unexpected life occurrence negatively impact them financially. About 70% said CPI is an affordable insurance option.
About one quarter of CPI claimants said they had made a complaint about the claims process, but the majority of those who had made a claim said they were satisfied with how their complaint was handled.
Lack of confidence in claim process by some CPI holders causes concern
About 22% of CPI holder respondents expressed a lack of confidence that a life insurance claim would be paid, without even having made a claim. As this level of confidence is well below the actual claims payout ratio, it is an issue that is concerning to the industry.
“We’re pleased that Canadians feel Credit Protection Insurance is a convenient, effective and affordable type of financial protection for them and their families,” said Keith Martin, co-executive director of the Canadian Association of Financial Institutions in Insurance (CAFII), which commissioned the survey. “However, the survey also shows that there is room for improvement. As an industry, we will continue to look for ways to improve customer satisfaction, and enhance the value to consumers of the Credit Protection Insurance products that our members provide.”