An Ontario man discovered that a line of credit he thought was secured is actually not secured after the death of his wife of 50 years.
“When I found out it wasn’t insured, I was devastated,” said John Richards of Uxbridge, Ont.
Richards said he and his wife Sandra wanted to get a home equity line of credit (HELOC) for $150,000, but said they also wanted to have life insurance on the loan in case something happened.
It is estimated that around eight million Canadians have a HELOC as a way to tap into the equity in their homes and access money for renovations, travel or general expenses.
Many people also choose to insure their HELOC with life or critical illness insurance with the same lender they have the line of credit with.
In 2018, Richards said, his wife was 69 when she signed a $150,000 HELOC and he said they both thought the line of credit included life insurance.
John Richards holds a photograph of his late wife of 50 years, Sandra Richards, in Uxbridge, Ontario.
The couple used HELOCs for family trips, home improvements and other expenses.
“I was always going to try to pay it off, but the life insurance was there as a stopgap,” Richards said.
But when Sandra died in November 2023, Richards discovered that the line of credit was not covered by life insurance. His bank has a policy to terminate life insurance when a customer turns 70.
“I had no idea they could say, ‘At 70, well, we won’t insure you anymore,'” Richards said. who explained that he did not know that he was not paying insurance premiums because he thought the insurance was included in his monthly interest payments, which are now almost $800 per month.
“I thought the fees they charged me each month included insurance,” Richards said.
HELOC is with TD Bank Group and in the terms and conditions of your life insurance agreement for the line of credit it says that you are eligible to apply for life insurance if you are between 18 and 69 years old.
A TD Bank spokesperson told CTV News Toronto in a statement: “This is an unfortunate situation and we offer our deepest condolences to the customer for their loss.”
“To preserve the privacy of our customers, TD cannot comment on the details of the case. We encourage Canadians to speak with an insurance advisor to find the coverage that best meets their needs and to review their policies periodically.”
CTV News checked with other banks and they also have policies to terminate HELOC life insurance policies when customers reach a certain age.
Some lenders terminate life insurance policies on lines of credit once a customer turns 65, 70, or even 75. You should check with your individual lender to find out.
Richards said he wishes he had known about the policy, as paying the money back will be difficult.
“I can’t afford that. I’m sitting here on a fixed income. If I have to pay that, I might be dead by then,” Richards said.
If you have a line of credit with a lender, you may want to check the terms and conditions when it comes to insurance. You may also want to consider purchasing additional coverage elsewhere to cover any debt you may have.