Compare Bank Mortgage Insurance With Term Life Before You Switch
Optional mortgage life insurance can look convenient, but the structure matters: FCAC says the lender is usually the beneficiary and the death benefit can shrink as your mortgage is paid down.
The Problem
What To Check Before You Keep the Bank Plan
Optional mortgage insurance is not automatically bad, but it is easy to compare the wrong thing. Start with structure, payout control, and certificate limits.
Declining Coverage
Your coverage shrinks every month as your mortgage balance decreases. But your premium stays exactly the same. You pay the same for less and less protection.
Bank Is the Beneficiary
If you die, the payout goes straight to the bank. Not your family. Your spouse has no choice in how the money is used. The bank gets paid, your family gets nothing extra.
Certificate Limits Matter
Optional mortgage insurance has conditions and exclusions. Ask for the certificate before you apply so you know what is covered, excluded, and capped.
The Solution
Independent Term Life Insurance
A personally owned policy can be cleaner because it is built around your family, not one lender's mortgage balance.
Level Coverage
Your $500K stays $500K the entire term. It never decreases. As your mortgage shrinks, the gap becomes extra protection for your family.
Your Family Is the Beneficiary
The full payout goes directly to your family. They decide whether to pay off the mortgage, cover living expenses, or fund education.
Apply Before Replacing Coverage
Keep existing coverage active until the replacement policy is approved and in force. Answer application questions carefully and read the policy wording.
Bank Mortgage Life Insurance
$68–$82/mo
- Coverage declines with your mortgage
- Bank is the beneficiary, not your family
- Certificate conditions and exclusions apply
- Not portable. lose it if you switch banks
Total over 20 years: $16,000–$19,680
Independent Term Life
$25–$35/mo
- Coverage stays at $500K the whole time
- Your family is the beneficiary
- Apply and confirm before cancelling bank coverage
- Portable. keeps coverage regardless of lender
Total over 20 years: $6,000–$8,400
Example 20-year premium gap
$10,000 – $13,000+
Source-backed structure check: FCAC says optional mortgage life insurance may pay the lender, the lender is the beneficiary, coverage usually decreases as the mortgage is paid down, and optional mortgage insurance is not required for mortgage approval. Estimates are illustrative and final pricing depends on application details.
Example Bank Rates vs. Term Life
Illustrative estimate for a 35-year-old non-smoking woman with a $500K mortgage and a 20-year term. Confirm your own quote before replacing coverage.
| Provider | Monthly | 20-Year Total |
|---|---|---|
| TD Bank | $67.66 | $16,238 |
| CIBC | $70.00 | $16,800 |
| BMO | $72.00 | $17,280 |
| RBC | $75.60 | $18,144 |
| Scotiabank | $82.00 | $19,680 |
| Term Life (Independent) | $25–$35 | $6,000–$8,400 |
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Compare Before You Switch
Use the free calculator to estimate the gap, then keep any current coverage active until replacement insurance is approved and in force.
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