Mortgage Insurance vs. Life Insurance

You may have heard that lender-provided mortgage life insurance—offered when you take out or renew a mortgage—is typically more expensive than individual life insurance policies available through licensed insurers. Beyond the higher cost, lender-issued mortgage insurance often comes with limitations in coverage and flexibility compared to personal life insurance.

To illustrate this, we recently ran quotes for two clients in April 2025 to compare the costs of personal life insurance with the mortgage insurance premiums they were offered through their lenders. The difference was significant:

Client Scenario One

  • Applicant: Male, age 52, and female,age 46, non-smokers.
  • Coverage: $700,000 joint first-to-die policy.
  • Term: 10-year (matching expected mortgage payoff timeline).

Annual Premiums

  • Personal Life Insurance: $1,635.
  • Lender’s Mortgage Insurance: $7,740.

Client Scenario Two

  • Applicant: Female, age 38, non-smoker.
  • Coverage: $800,000.

Annual Premiums

  • Personal Life Insurance (10-year term): $275.
  • Personal Life Insurance (20-year term): $464.
  • Lender’s Mortgage Insurance: $1,663.

As these examples show, the cost difference can be substantial, and personal life insurance typically provides better protection, flexibility, and control. We’ve also prepared a summary comparing the key differences between personal life insurance and lender-issued mortgage coverage in this document.
 
If you or someone you know is taking on a new mortgage or renewing an existing one, it’s worth reviewing all your options. Contact us for a personalized quote and ensure you're getting the right coverage at the right price.

Insurance products and services including life insurance, segregated funds and accident & sickness insurance are offered to you through Richardson Wealth Insurance Services Limited (“RWISL”). RWISL is licensed as a life insurance agency in various jurisdictions across Canada including BC, AB, SK, MB, NWT, ON, QC, NB, NS, PEI and NL. Insurance products are not covered by the Canadian Investor Protection Fund. Richardson Wealth Limited is a member of Canadian Investor Protection Fund. Richardson Wealth is a trademark of James Richardson & Sons Limited, used under license. This publication is intended for informational purposes only and is not intended to constitute investment, financial, legal or tax advice. It does not take into account your particular situation and is not intended as a recommendation. You should seek advice regarding your particular circumstance from your personal tax and/or legal advisors. This publication is based upon information considered to be reliable, but neither Richardson Wealth Limited nor its affiliates warrants its completeness or accuracy, and it should not be relied upon as such.