Bank Mortgage Insurance vs. Personal Term Life
The question homeowners ask constantly: should I take the bank's mortgage insurance, or buy my own term policy? Here's the honest comparison.
Book a CallThe short version: personal term life usually costs less, stays level, follows you if you switch lenders, and is approved up front. Most bank creditor insurance is underwritten at claim time (not at application), so coverage isn't guaranteed until a claim is filed.
Side by side: bank creditor insurance vs. personal term life
- Who owns it: The bank owns creditor insurance. You own a personal term policy.
- Beneficiary: The bank is the beneficiary of creditor insurance. You choose the beneficiary of a personal policy.
- Payout: Creditor insurance shrinks as your mortgage balance declines. Personal term pays the full amount.
- Underwriting: Most bank creditor insurance is underwritten at claim time (not application). Personal life insurance is approved up front, so coverage is certain.
- Portability: Creditor insurance is tied to the lender. Personal term follows you if you switch lenders or refinance.
- Cost: Personal term often costs less per month than the bank's premium — and the payout is higher.
Mortgage Insurance vs Life Insurance
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CBC Marketplace Investigation
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Find out more about bank owned creditor protection. CBC Marketplace 2 minute summary of investigation.
When you're taking on a new mortgage or renewing
A new mortgage or a renewal is the single best moment to compare personal term life against the bank's creditor insurance. You're already reviewing your financial obligations — add a 15-minute comparison to the list.
I shop your file across 15 Canadian insurers to find the best rate for your health class and age, then show you the real numbers side by side. Most homeowners are surprised at how much coverage they can own for less than the bank charges.