What is the Best Mortgage Life Insurance for 2023?

You did it! You purchased your brand new dream home in the Ontario countryside, and you just cannot wait to move in and start making your house a home. During the excitement, you pause to think about what steps you need to take to be sure your beautiful new home is fully protected – you have insurance in place in the event of fire or flooding. But what happens to your mortgage if something happens to you?

Many homeowners face the same question; if you were not around, could your family continue to pay for the mortgage?

Mortgage protection insurance may be just what you need to be sure that your loved ones are protected in the event of a death. It also may be a good option if you do not qualify for traditional life insurance or desire additional protection.

What is mortgage protection life insurance?

Mortgage life insurance, also known as mortgage protection insurance, is a policy that pays off a mortgage in the event of the death of the borrower. The terms are used interchangeably in this article.

It is a product offered by many life insurance companies and banks. It is essentially a term life insurance that equals the mortgage’s length. Under a typical term life insurance policy, you may choose your beneficiary. Mortgage life insurance policies are a little different. The beneficiary is always the lender, who will be paid the remaining balance of your mortgage.

That means your family only benefits indirectly. Rather than money, this policy leaves them a paid-off home and place to live.

Imagine you owe $150,000 on your mortgage when you pass away, the mortgage protection insurance policy will pay off the balance. The policy will pay off that remaining mortgage. The home will now be mortgage-free, but your family will have no say in how that money is spent (the insurer pays it directly to the lender).

One of the downsides of mortgage life insurance is that it provides a declining payout. As time goes by, you chip away at the balance of your mortgage through monthly payments. These decrease the potential payout. With mortgage insurance, your overall coverage decreases, but your premiums do not necessarily follow. Some providers now offer “level death benefit” so the payout remains the same, even when the mortgage debt dips below the value of the coverage amount.

What is the difference between mortgage life insurance and mortgage default insurance?

Mortgage life insurance and mortgage default insurance sound like similar products. They are easy to confuse. Mortgage default insurance may be required without a 20% downpayment, while mortgage life insurance is entirely optional. Refer to the chart below to compare the two and see if mortgage life insurance is worth it for you.

Type of Insurance	Mortgage life insurance	Mortgage Default Insurance
Who is the beneficiary of the policy?	The lender is the beneficiary and uses the insurance to pay off the mortgage in the event of your death.	The lender is the beneficiary in the event that you default on your mortgage.
Is it mandatory?	Coverage is not mandatory in Canada.	Coverage is mandatory if your down payment is less than 20%
What happens if I move my mortgage?	Mortgage insurance is not transferable. If you move your mortgage to a new lender, you must resubmit for insurance. This may result in premium increases.	Your insurance stays unchanged for the entire term of your policy.
Do premiums increase?	Premiums are subject to fluctuation.	Premiums will remain the same.
Is sales tax applicable?	Sales tax is not applicable.	Sales tax is applicable.

How much does mortgage protection insurance cost?

The cost of your mortgage insurance will depend on the amount of your mortgage. Depending on your age, premiums range from 10 cents to $1.65 for every $1,000 in coverage. However, because you pay down your mortgage amount over time, the amount left on your mortgage that will be covered in the policy will also decrease.

If you were to purchase a $600,000 house with a 15% ($90,000) down payment, this means a mortgage of $510,000. If you purchase mortgage life insurance premiums you would pay them on that $510,000 amount for the life of the mortgage. If 10 years later, you have paid down your mortgage to $310,000, you would still have the same premium for mortgage life insurance. The amount of coverage has dropped from $510,000 to only $310,000 as your mortgage amount has decreased.

Need a quote? Just use the comparison tool at the top of this page to get and compare prices on mortgage protection insurance

What does mortgage protection insurance cover?

A mortgage life insurance policy covers mortgage debts and associated costs. These policies do not pay out unless a borrower dies while there is still a balance on the mortgage. The beneficiary is the mortgage lender, but it provides a paid-off home for the borrower’s family.

Mortgage protection insurance is an indirect way of protecting one’s family when compared to a traditional life insurance policy on which they would be the direct beneficiary.

Let's take an example. Michel from Ontario has been turned down for life insurance due to his chronic asthma, but he wants to make sure that his boyfriend will be able to live in their house if something happens to him. As he is not able to take out traditional term life insurance, mortgage life insurance could be a good fit for him.

How much mortgage insurance do I need?

For a mortgage life policy, an insurer will require you to purchase enough mortgage insurance to cover the cost of your mortgage. For example, if you purchase a $750,000 home and pass away during the life of the loan, this would pay off the entire remaining balance on the mortgage. Without full coverage, you would potentially have less coverage than what is owed on the home.

How to find the best mortgage life insurance?

As with all kinds of insurance, the way to find the best deal is to shop around, read the small print and find a policy that suits your specific needs. Mortgage life insurance premiums can vary between $1 and $20 a year.

The best way to find the best mortgage life insurance deal is by using the online comparison tool at the top of this page. You can add the details of your specific situation and compare leading providers.

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What is the difference between mortgage life insurance and life insurance?

Mortgage life insurance and life insurance sound similar so it is easy to confuse the two products. However, there are many important differences between each type of policy. See our chart that breaks down the main differences to make sure you are purchasing the right plan for you.

Type of insurance	Mortgage protection/mortgage life insurance	Term life insurance
Who is the beneficiary of the policy?	The lender is the beneficiary and uses the insurance to pay off the mortgage.	You designate beneficiaries when you purchase the policy. They may use the money however they see fit, including to pay off the remaining mortgage.
Does the coverage expire?	Your coverage will end when your mortgage is paid off.	You pick the term of your policy. It is unrelated to the length of any mortgage.
What happens if I move my mortgage?	Mortgage insurance is not transferable. If you move your mortgage to a new lender, you must resubmit for insurance. This may result in premium increases.	Your insurance stays unchanged for the entire term of your policy.
What happens if you pass away?	The coverage will pay off whatever is left on the balance of your mortgage. If you pass away and still owe $50,000, then the insurance will cover that amount.	Your beneficiaries get the full amount of your policy.
What if I get sick and can’t work to pay the mortgage payments?	A mortgage life insurance plan will not cover the payments. This kind of coverage is offered through disability insurance available privately or through an employer.	Disability is not covered by a life insurance plan. A death will need to occur to trigger a payout.
Do my premiums change?	The premiums remain unchanged for the term of the mortgage even though you continue to pay down your mortgage.	Premiums may change if you decide to renew your policy at the end of a term (according to your age or new health issues).

Who sells mortgage life insurance?

Mortgage life insurance is typically sold by either your lender as an add-on to your mortgage or by a separate insurance provider. Remember that mortgage life insurance is not mandatory and you should always closely read the terms and exclusions to make sure that a policy is serving your needs first and not those of the seller.

Let's take a look at some of the policies provided by Canada's big names.

Provider	Policy name	Max benefit	Exclusions (result in no payout)
Canada Life	Mortgage Life Insurance	$500,000	coverage in place for less than 24 months suicide
CIBC	Life Insurance for Mortgages	$750,000	coverage in place for less than 24 months suicide death due to intoxication death while committing a crime
RBC	HomeProtector Mortgage Insurance	$750,000	coverage in place for less than 24 months suicide death due to intoxication death while committing a crime
Sun Life	Life and Disability Insurance	$750,000	coverage in place for less than 24 months suicide death due to intoxication
TD	TD Mortgage Protection	$1 million	coverage in place for less than 24 months suicide death due to intoxication death while committing a crime

Here is a brief overview of the plans offered by some of the best companies in the market.

Scotiabank: Mortgage Protection Insurance

Scotiabank mortgage insurance, one of the most reputed names in the industry, offers homeowners a wide range of comprehensive coverage options to provide financial protection in various circumstances.

The company's Disability insurance ensures that homeowners receive a maximum benefit of up to $3,500 per month, along with their Disability and Job Loss insurance premium, for a duration of up to 24 months in the event of a disability. In the unfortunate event of the homeowner's passing, the Life insurance coverage can pay off the outstanding mortgage balance, providing coverage of up to $1,000,000 per account or up to $1,000,000 for all insured mortgage accounts. Critical Illness insurance offers coverage for specific critical illnesses, including Heart Attack, Stroke, or Cancer, and can pay off the mortgage balance up to $500,000 per account or up to $500,000 for all insured mortgage accounts.

Finally, the Job Loss insurance coverage supports homeowners with a maximum benefit of up to $3,500 per month. This will be provided in addition to the Disability and Job Loss insurance premium, for a period of up to 6 months per Job Loss. These comprehensive coverage options empower homeowners to choose the level of protection that suits their needs, ensuring financial security and peace of mind for themselves and their families. The policies offered by the company can be availed through a straightforward application process and simplified medical requirements, eliminating the need for a medical exam in many cases. Calculate how much your premium could cost using this calculator.

Manulife: Mortgage protection insurance

Manulife, one of Canada's largest life insurance companies, offers both Mortgage Disability Insurance and Mortgage Life Insurance plans, providing budget-friendly payment options - Monthly, semi-monthly or weekly. Both coverages can start immediately and come with a 60-day money-back guarantee thereby giving its customers the opportunity to consider their options while being covered.

The Disability Insurance from Manulife offers generous coverage of up to $10,000 per month for a combined maximum duration of 24 months. In addition, it also provides its customers with a bonus disability payment to assist homeowners in their recovery once they get back to work, if they have not already received the maximum number of payments. That apart, homeowners will also have the option to complement their coverage with mortgage life insurance for added protection.

Manulife's mortgage insurance offers a substantial coverage of up to $1 million per person. An exceptional feature called the Life Bridge Benefit ensures that homeowners are not financially burdened while their life claim is being reviewed by covering mortgage payments. This benefit bridges the gap until the claim is settled. Additionally, homeowners have the option to enhance their coverage with mortgage disability insurance for comprehensive protection. Find out how much mortgage you can afford here.

TD: Mortgage Protection

TD offers a higher death benefit limit than its competitors of $1 million. Consequently, its premium rates are also higher, between 13 cents and $1.66, and the coverages start instantly.

To further elaborate the policy, TD Mortgage Life Insurance can provide up to $1,000,000 towards several crucial aspects, including your outstanding TD Mortgage balance (after deducting any arrears), discharge fees, prepayment charges, and interest owing. To further enhance your protection, you can also opt for Mortgage Critical Illness Insurance, which offers coverage of up to $1,000,000 in case of a life-threatening cancer diagnosis, acute heart attack, or stroke. With TD Mortgage Protection, you can have peace of mind knowing that you have substantial financial support to help alleviate the burdens associated with unexpected circumstances.

TD offers a seamless application process with options to access through phone, online, or just drop-by at a nearby branch. is known to negotiate a better mortgage interest rate for those who ask, depending on their credit history and financial profile. Meanwhile, as far as the claims are concerned, they must be made within three years of death or the coverage may not pay out. You may only take out one mortgage life insurance policy per mortgage. Deaths caused by intoxication by drugs or alcohol or suicide are not eligible for a payout. You can calculate your mortgage payment using this calculator.

HSBC: Mortgage Creditor Insurance

HSBC offers two types of Mortgage Creditor Insurance to provide comprehensive coverage for homeowners. HSBC Mortgage Creditor Life Insurance is designed to alleviate financial burdens in the event of the homeowner or their co-insured partner's passing. This insurance can reduce or completely pay off the outstanding HSBC Mortgage balance, providing coverage of up to $750,000. The key benefit is that it relieves the family from worrying about mortgage obligations during a difficult time.

Meanwhile, there is the HSBC Mortgage Creditor Disability Insurance that protects customers if they become disabled due to a covered illness or injury. In such cases, this insurance pays the HSBC Mortgage payment, offering coverage of up to $4,000 per month for a maximum duration of 24 months. This coverage provides security and peace of mind by ensuring that mortgage payments are made while the homeowner recovers.

Mortgage Creditor Insurance may be cancelled at any time and customers have 30 days to review their respective plans with a money-back guarantee. Further, there are incentives to link customers' banking and mortgage through the HSBC Rewards Program. You can calculate your premium here.

Sun Life: Life and Disability Insurance

Sun Life, one of the largest insurance companies in the world, offers both Life and Disability Insurance with mortgage protection to an upper limit of $750,000. It also offers critical illness and disability insurance protection on insurances. Sun Life offers a premium rate of 10 cents to $1.13. You may be able to renegotiate your premium rate if you can pay a lump sum payment of $5,000 or more to your mortgage lender.

In the event of a disability claim, SunLife provides a monthly benefit of up to $4,000 per insured, considering all mortgages combined. This benefit can be claimed for a maximum period of 24 months per disability claim. Additionally, there is a lifetime maximum payment period of 48 months, ensuring continued support and financial stability for homeowners during challenging times.

Sun Life will not cover the death of a policyholder from war or civil unrest unless the policyholder is a serving member of the Canadian Armed Forces. It is worth noting that to facilitate the prompt resolution of insurance claims, customers must make sure to raise their claim within 90 days of the date of end of the qualifying period. You can use this calculator to get a better understanding of the premiums and options.

RBC: HomeProtector Mortgage Insurance

The Royal Bank of Canada offers a premium rate of between 10 cents and $1.63 for non-smokers. The life insurance coverage is up to $750,000.

If you are taking out a joint policy then the premium rate will be calculated using the older partner's age. RBC also offers critical illness and disability insurance policies that specifically protect your mortgage. With Critical Illness Insurance, in the event of a covered critical illness such as life-threatening cancer, heart attack, or stroke, it provides the option to pay off or reduce the outstanding insured balance of your RBC Royal Bank mortgage. The coverage for Critical Illness Insurance can go up to $300,000.

On the other hand, Disability Insurance provides coverage of up to $3,000 per month for a maximum period of 24 months. This insurance helps protect you by providing financial assistance to cover your mortgage payments in case you become disabled due to illness or injury. Once you apply for mortgage insurance, your premium will be determined based on your age and mortgage balance, and this rate will remain locked in. You can be assured that your premium will not increase due to changes in your age, as long as your mortgage balance remains the same throughout the life of your mortgage and you do not refinance it. Get your premium calculation done here.

Laurentian Bank: Mortgage Insurance

Laurentian Bank offers Life and Disability Mortgage Insurance policies. With their Life insurance policy, homeowners can obtain coverage up to a maximum insurable amount of $750,000 for their loan or set of loans. This provides substantial protection for the outstanding mortgage balance.

In terms of Disability insurance, Laurentian Bank provides a maximum benefit of $2,500 per month, with a coverage period of up to 24 months per period of disability. There is no limit on the number of disability periods, ensuring continued financial support in case of prolonged disabilities. It's important to note that arrears, property taxes, and school taxes are not covered by this insurance.

In addition to their Mortgage Insurance policies, Laurentian Bank offers a special offer called the Mortgage and Line of Credit Insurance Assistance Program. This program is provided at no extra cost for the remaining term of the loan when homeowners enroll in insurance for a new or existing mortgage, Home Equity Line of Credit, or Line of Credit. The program includes several valuable services to support homeowners throughout their loan term including financial coaching, legal advice support, and psychological support. Calculate the amount of your mortgage payments using this calculator.

CIBC: Life Insurance for Mortgages

CIBC has a higher benefit limit of $750,000. It also requires that policy buyers must be aged between the age of 18 and 64 and must be residents in Canada. One additional stipulation notes that the policy will not pay out if the holder dies in the commission of a crime (meaning this is not the right mortgage protection for bank robbers).

CIBC's premium rates are slightly higher than Canada Life's ranging from 8 cents for a non-smoker in their twenties to $1.62 for a non-smoker in their sixties. Customers have a 30-day period starting from the date they receive the Certificate of Insurance to review their coverage and assess if it aligns with their requirements. Should you decide to cancel your coverage within this review period, you will receive a complete refund of any premiums you have paid. This allows you the opportunity to carefully evaluate your insurance and make an informed decision that suits your needs.

Note: members of the Canadian armed forces are exempt from the minimum residency requirement of 183 days per year that applies to other applicants.

Calculate what your mortgage payment could be with the help of this calculator.

National Bank of Canada: Mortgage Insurance

Mortgage loan insurance from National Bank of Canada offers comprehensive coverage for customers' mortgage loan or All-In-One™ line of credit. With three types of coverage available — life, disability, and critical illness insurance — customers can protect themselves against unexpected circumstances.

When customers sign up for life, disability, and critical illness insurance on their mortgage loan, they can even receive up to $1,000 in cash back as a bonus. National Bank provides a maximum insured amount of $1,000,000 in the event of death, $3,000 per month in the event of disability, and up to $150,000 in the event of critical illness.

Additionally, one has the opportunity to earn up to $5,650 in cashback by transferring one's mortgage and adding eligible products and services to the mortgage loan. The promotional offers are valid until October 31, 2023, and could be verified for more details and updates on the company's official website. Use this tool to calculate how much your payment will be.

BMO: Mortgage Protection Insurance

BMO Canada provides comprehensive mortgage insurance coverage with options for different circumstances. Under their life insurance coverage, homeowners can be supported with a maximum coverage amount of $750,000. In the event of a covered critical illness, such as cancer, heart attack, coronary artery bypass surgery, or stroke, BMO's critical illness insurance can help cover the mortgage balance up to a maximum of $450,000, with the coverage amount being equal to or less than the percentage of life coverage.

BMO's mortgage insurance also includes disability insurance up to a maximum monthly amount of $3,000. Benefits are paid for up to 24 months per disability, with a 30-day qualifying period before benefits start.

Additionally, BMO offers job loss insurance up to a maximum monthly amount of $3,000. Job loss benefits are paid for up to 6 months per job loss, with a 60-day qualifying period before benefits start. You can use this calculator to put a number to your insurance premium based on your selected coverage options.

Canada Life: Mortgage Life Insurance

Canada Life offers life insurance on your mortgage to all borrowers, co-borrowers and guarantors aged between 18 and 64, and who are residents of Canada. The policy covers the outstanding debt on a mortgage if the policyholder dies unexpectedly, up to a limit of $500,000. Canada Life may require a health assessment in these circumstances:

• If you have experienced serious illness within the last 2 years
• If have a history of drug or alcohol abuse
• If you have a history of depression or other psychiatric issues
• If you have any immune diseases

The formula for working out the monthly premium amount is the amount of your mortgage multiplied by the applicable premium rate, divided by 1,000 and with additional taxes added on.

The premium rate is set in relation to your age and smoker status. The rate can range between 11 cents to $1.64 for a smoker and 7 cents to 88 cents for a non-smoker.

The life insurance benefit can be calculated with the following formula. The amount of mortgage you are insured for, divided by the mortgage loan amount, multiplied by the outstanding mortgage balance at the date of death.

For example: if you had a $600,000 mortgage. Canada Life's mortgage life policy insures you up to a limit of $500,000. Let's say the outstanding balance a the time of death is $400,000. The calculation would go: 500 000 divided by 600,000 equals 0.83 x 400,000 equals $333,333. Use this calculator to calculate how much mortgage you can afford and plan accordingly.

Need a quote? Try the comparison tool at the top of this page. Get a quick, anonymous quote on mortgage protection insurance now.

Are there other ways of protecting a mortgage?

For most Canadians, your home is your largest asset. Fortunately, there are multiple ways to protect it. It is wise to protect your ability to continue to pay your mortgage each month. What will happen if you are severely injured and cannot work? Or what about your family and other bills that you have, how will those be taken care of in the event of your death? While mortgage life insurance will pay off the remaining balance on your home, there are other forms of insurance to protect not only your mortgage but also basic monthly income:

• Traditional life insurance pays out a beneficiary of your choosing in the event you pass away unexpectedly. It lets them continue to pay bills and daily living expenses including mortgage payments.
• Critical Illness insurance pays out in the event that you are diagnosed with a severe illness and are unable to work.
• Disability insurance is similar to critical illness insurance. It pays out if you are diagnosed with an illness or injury and are unable to work for a temporary or permanent amount of time.

Let's take an example: Benedict, 35, from Ontario, has just bought a house worth $150,000 with a $19,000 deposit. As his deposit is under $20,000 he has to buy mortgage insurance. However, he is not obligated to buy mortgage life insurance. As he is young and in good health he will probably get a good deal on a term life insurance plan. If he takes out a policy now and keeps up with payments he will be well protected by the time his health becomes more at risk when he gets older.

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