Quick answer
For most healthy people, an individual term life policy is cheaper and more useful than the bank's mortgage insurance. At CIBC's published rate, a 35-year-old pays $0.13 a month per $1,000 of the starting mortgage, or $65 a month on $500,000, while the payout falls with the balance and goes to the bank. On our live quotes on October 29, 2026, a level $500,000 25-year term for a 35-year-old male non-smoker started at $40.50 a month, and the full amount goes to the family.
Four Ways Bank Mortgage Insurance Falls Short
The payout shrinks, the premium doesn't. Bank premiums are worked out on the starting mortgage amount. CIBC's own example: a 36-year-old with a $150,000 mortgage pays $30 a month. Ten years in, the balance is far lower, and so is what the bank would pay, but the premium is still $30.
The bank is the beneficiary. The payout clears the mortgage. Your family doesn't get to choose whether paying off a 3% mortgage is the best use of the money, or whether they'd rather keep it for living costs.
Health is checked at claim time. Many creditor plans ask a few health questions at signing and check your medical history after a claim. A mistake on that short form can mean a denied claim when your family needs it most. A term policy is underwritten before it's issued.
It doesn't move with you. Switch lenders at renewal and the bank's coverage usually ends. Your term policy stays with you, at the same price, whatever happens to the mortgage.
If a health problem means you can't get individual coverage at a fair price, a creditor plan may be the option left. Apply for individual cover first, and keep the bank's as a backup until you're approved.
"Mortgage default insurance" (CMHC, Sagen, Canada Guaranty) protects the lender if you stop paying, and is required with under 20% down. It's not life insurance and doesn't pay anything to your family.
How Bank Coverage Shrinks Over Time
Enter your mortgage. We'll show the bank premium at CIBC's published rates and what it would actually pay out as the balance falls.
CIBC single-coverage mortgage life rates per $1,000 of the initial insured amount, plus any provincial tax. TD's published rates are similar ($0.14 at 31 to 35, $0.22 at 36 to 40). Rates can change.
Bank Rates vs Live Term Quotes
CIBC mortgage life, single, on $500,000
| Age | Rate per $1,000 | Monthly |
|---|---|---|
| Under 30 | $0.08 | $40.00 |
| 30 to 35 | $0.13 | $65.00 |
| 36 to 40 | $0.20 | $100.00 |
| 41 to 45 | $0.29 | $145.00 |
| 46 to 50 | $0.43 | $215.00 |
| 51 to 55 | $0.64 | $320.00 |
| 56 to 60 | $0.82 | $410.00 |
Level 25-year term, $500,000, male 35
| Plan | Monthly |
|---|---|
| Wawanesa Lifetime Term 25 | $40.50/mo |
| BMO Term 25 | $42.30/mo |
| Beneva Term Plus 25 | $42.30/mo |
| Canada Life My Term 25 | $42.54/mo |
| Co-operators Versatile Term 25 | $42.75/mo |
| iA Pick-A-Term 25 | $42.75/mo |
| Desjardins Term 25 | $43.20/mo |
| Empire Life Solution 25 | $43.65/mo |
Live quotes on our site on October 29, 2026. Ontario, non-smoker, Regular health class. Your price depends on your health answers.
Mortgage Insurance vs Term Life: Your Questions
Is bank mortgage insurance mandatory in Canada?
No. Mortgage life insurance from a bank is optional. Mortgage default insurance (CMHC and others) is a different product, required when you put down less than 20%.
Is term life insurance cheaper than mortgage insurance?
For healthy people, usually yes. On $500,000 at age 35, CIBC's published rate works out to $65 a month. Our live 25-year term quotes on October 29, 2026 started at $40.50 for a male non-smoker.
What happens to bank mortgage insurance if I switch lenders?
It usually ends. You'd have to reapply with the new lender, at your new age and health. A term policy isn't tied to any lender.
What is post-claim underwriting?
It means the insurer checks whether you qualified only after a claim is made. Many creditor plans work this way. Individual term policies are underwritten before they're issued.
Who gets the money from mortgage insurance?
The bank. The payout goes against the mortgage balance. With term life, your named beneficiary gets the full amount, tax-free, and decides how to use it.
Should I cancel my bank mortgage insurance?
Not until a new term policy is approved and in force. Then cancel the bank coverage so you're never without protection.
Pankaj Bhatia, PFA, CHS
Pankaj is a licensed insurance advisor with offices in Mississauga and Cambridge, Ontario, and a member of Advocis. He helps families compare Super Visa and visitor plans from Canadian insurers and sorts out claims and refunds when plans change.
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