Short answer
Mortgage protection from your lender is optional, pays the lender and covers a balance that shrinks over time. A personal term life policy pays the people you name a set amount they can use for the mortgage or anything else. Run your number with the family protection calculator before you choose.
Run your number The family protection calculator shows how much your family would need and what is missing today. No-cost, no obligation.
How lender mortgage insurance works
- It is optional. The Financial Consumer Agency of Canada notes a lender cannot make it a condition of your mortgage.
- The benefit goes to the lender to pay down the balance.
- The balance shrinks as you pay, but premiums often stay the same.
- Read the certificate to see what is covered and what is not.
How a personal term policy is different
- The money goes to the people you choose, not the lender.
- The amount stays the same for the term.
- It stays with you if you switch lenders or move.
- You can size it to cover more than the mortgage, like income and school costs.
Questions to ask before you sign at the bank
Who gets the money? Does the amount go down as I pay? Is my health checked when I apply or when a claim is made? What happens if I move my mortgage?
Which fits you
It depends on your health, budget and goals. Compare both, and check what you already have through work.
Frequently asked questions
Is mortgage protection insurance required in Ontario?
No. Optional mortgage life insurance from a lender is not required to get a mortgage.
Who gets paid with mortgage protection insurance?
The lender. The benefit pays down your mortgage balance.
Can term life insurance cover my mortgage?
Yes. Your beneficiaries receive the benefit and can use it to pay the mortgage or other costs.
What if I switch lenders?
Lender coverage is usually tied to that mortgage. A personal policy stays with you.
Sources and further reading
This page is general education, not personal advice. Rules can change, so check the official sources above. In Ontario, life insurance quotes are prepared by a licensed life insurance agent.