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Mortgage life insurance

Are you looking for mortgage life insurance? You have a couple of different options, some better than others.

Mortgage life insurance through your bank.

Mortgage life insurance offered through your bank is not an individual life insurance policy. Instead, it’s group creditor protection insurance. That means the policy is actually owned by the bank, you have no control over the coverage.

Bank mortgage life insurance is generally twice the cost of an individual term life insurance policy – it’s expensive stuff. And in addition to being expensive, it lacks a few very important features commonly found in individual term life insurance policies.

Bank insurance:

  • if you die, bank mortgage life insurance pays the bank, not your family.
  • cost is level for the term of your mortgage (i.e. 3 or 5 years), but can increase if you switch banks or loan companies.
  • cost is not guaranteed, your premiums could be increased at any time.
  • bank mortgage life insurance can be cancelled by the bank based on a variety of factors outside your control.
  • if you become uninsurable, the next time you need mortgage life insurance you won’t qualify – there’s no options to lock in a life insurance policy for life.
  • your premiums are projected to stay level, but your insurance coverage actually goes down as you pay your mortgage off.
  • when you pay off your mortgage you may still need life insurance, but of course bank mortgage life insurance goes to zero at that point. 

Now compare that to an individual term life insurance policy that you can run quotes for at the top of this page.

Term Life Insurance

  • Pays you, not your bank. Your family can choose to pay off the mortgage, or continue to make mortgage payments.
  • Cost is level for your choice of 10 years (10 year term) through as long as 30 years; you can lock in your premiums for as long as your mortgage.
  • Once the policy is issued, premiums are guaranteed level for the duration of the term that you selected.
  • Cannot be cancelled by the life insurance company except in cases of fraud.
  • If you become uninsurable, you have the option of switching your term life insurance policy to permanent lifetime coverage, at healthy premiums, without any medical questions.
  • Premiums are guaranteed level for the term that you selected AND coverage is guaranteed to remain level for the duration of the policy.
  • Unrelated to your mortgage, you can keep the coverage even if you pay off your mortgage.

It’s clear that bank mortgage life insurance is a poor way to insure your mortgage. You’ll have better coverage and lower costs with a term life insurance policy – and you can start comparing premiums using our online life insurance quoting system at the top of this page!