Best Mortgage Insurance Companies in Canada: Reviews & Ratings (2024)

What is mortgage insurance?

Mortgage insurance is a type of life insurance plan mostly sold by banks. It will pay the outstanding balance on your mortgage in case you suddenly pass away.

Mortgage insurance is not the same as Mortgage Loan Insurance or Mortgage Protection Insurance. This is one of the reasons why people get roped into buying it — there are so many different names out there that it can be confusing.

Private mortgage insurance or mortgage protection insurance is a term life insurance plan. It gives a payout called a death benefit to your beneficiaries at the time of death. They can then use that money for anything — the mortgage and/or something else too.

You do need some of these insurance products to secure your mortgage, but others you do not. The chart below will help you be able to tell the difference.

How does mortgage insurance work?

Mortgage insurance is primarily sold by banks. When you sit down with your mortgage broker or lender, they’ll likely offer you insurance on your mortgage. This insurance will pay off your mortgage in the event of death.

This is mortgage insurance. It only goes toward the insured balance of your mortgage. As you pay your mortgage off, the amount this type of insurance pays also decreases.

Mortgage insurance premiums are conveniently tacked onto your monthly mortgage payments. So, it sounds like a great protection plan for the biggest purchase of your life. But there are better options out there beyond what your broker or lender has to offer.

Who needs mortgage insurance?

Mortgage insurance can be a crucial financial safeguard for certain individuals and families. Here are some key groups that should consider mortgage insurance:

• First-time homebuyers
• Young families
• Single-income households
• Homeowners with high debt
• Elderly homeowners

Do I need to buy mortgage insurance from my bank? 

No, you do not need to buy mortgage insurance from your bank or lender.

When you apply for a mortgage with a lender, it’s the mortgage broker or bank agent’s job to cross-sell their products to you. They may make it seem like you have to say yes to their insurance, but that’s not the case. You can opt for mortgage protection through life insurance instead.

Addtionally, you must remember that private mortgage insurance means the same thing as mortgage protection insurance. It’s a term life insurance product that gives a tax-free payment to your loved ones at the time of death. The payment can be used for anything, and it won’t change even if your mortgage changes.

Are mortgage life insurance and mortgage default insurance the same?

Mortgage life insurance and mortgage default insurance serve distinct purposes despite their similar-sounding names. Mortgage life insurance is designed to pay off your mortgage in full if you pass away during the mortgage term, ensuring your loved ones are not burdened with mortgage payments. 

On the other hand, mortgage default insurance, often required by lenders for high-ratio mortgages with a down payment of less than 20%, protects the lender in case you default on your mortgage payments. 

For example, think of John, a new homeowner, who decides to purchase his first home with a mortgage. Because John’s down payment is less than 20% of the home’s value, his lender requires him to obtain mortgage default insurance.

This insurance protects the lender in case John defaults on his mortgage payments, ensuring that the lender recovers their investment in the event of financial hardship. 

Additionally, John decides to safeguard his family’s future by also purchasing mortgage life insurance. Unfortunately, John passes away unexpectedly during the mortgage term.

His mortgage life insurance policy pays off the remaining mortgage balance directly to the lender, relieving his loved ones from the burden of mortgage payments and allowing them to remain in their home. 

Canada Best Mortgage Protection Insurance Companies

• Assumption Life: Best for simplified issue
• Beneva: Best for combination coverage
• Canada Life: Best for financial strength
• Empire Life: Best for personalization
• Industrial Alliance (iA): Best for flexibility
• UV: Best for riders

Compare the best mortgage protection insurance companies

Here are Canada’s best mortgage insurance companies that offer diverse features. If you’re looking for the best mortgage protection plan, these are some of the companies to consider:

Mortgage life insurance vs life insurance: What is the difference?

Mortgage life insurance and regular life insurance policies serve different financial purposes. Mortgage life insurance pays off the remaining mortgage balance if the insured passes away during the mortgage term. 

On the other hand, regular life insurance provides broader coverage, offering a lump sum payment (death benefit) to beneficiaries in the event of the insured’s death. This can be used for various financial needs such as income replacement, debt payoff, and education expenses. 

Let’s have a look at the differences between these two:

Reviews of top mortgage protection insurance companies in Canada

Assumption Life Mortgage Protection Insurance – Best for simplified issue

If you want to quickly get coverage for your mortgage without having to take a medical exam, then you should look at Assumption Life’s Flexterm plan. This is called simplified insurance. You can get approved much faster, although at a higher cost.

Assumption offers terms ranging from 10 to 35 years, as well as a decreasing term option that you can match with your mortgage.

They also have regular plans if you don’t mind doing a health assessment. And, getting a fully underwritten plan gives you far more options for premium rates, riders, and benefits:

• Critical Illness Rider covers 16 illnesses, which is more than many of Assumption’s competitors cover
• Disability Income Rider gives extra coverage on top of regular income replacement in the event of disability
• Extreme Disability Benefit is included at no additional cost — very rare in Canada!

Beneva Mortgage Protection Insurance – Best for combination coverage

Beneva’s Term Plus is a good choice for homeowners seeking an all-in-one solution for mortgage protection. It’s a multi-purpose plan that you can put to good use for several things. And, the company gives you some pretty tempting options to help maximize your coverage.

You can pick a decreasing term to match your mortgage, and get optional add-on riders at a small extra cost to create a plan with multiple types of coverage at a great price — all in one place.

Plus, Beneva has a rare Extreme Disability Benefit included for free in all of its plans. Most other companies only give you these kinds of insurance coverage if you pay an additional cost.

Add that to their riders for critical illness and disability insurance protection, and you have an easy way to tick all of your insurance boxes in one go!

Canada Life Mortgage Protection Insurance – Best for financial strength

Canada Life is an excellent choice if you want to be insured with a company that has financial stability. According to our records, they’re one of the largest life insurance companies in all of Canada. You can feel secure getting coverage with them and knowing they’re probably not going anywhere anytime soon.

They also have a Business Growth Protection rider that’s particularly useful for business owners. It lets them buy more insurance coverage when their share of the business grows. So, you can get easier access to more insurance while protecting your mortgage at the same time.

You can choose any term length from 5 to 50 years with Canada Life. And, they have optional add-on riders like child’s term life insurance to let you create comprehensive mortgage insurance coverage.

One downside is that they don’t have a rider that can cover you for disability. They only have a full disability insurance policy. But, it is an amazing plan for helping to protect your mortgage in the event of disability.

Empire Life Mortgage Protection Insurance –  Best for personalization

Empire Life has some of the most versatile mortgage protection insurance in Canada. They give you 6 different, customizable policies and a ton of rider options that can cover a wide range of needs. You can create exactly the kind of policy you want to get coverage for almost anything!

Their Solution 25 policy is great if you need insurance for loans. You can also apply for longer or shorter term lengths, or buy optional critical illness and/or disability riders at an extra cost to cover all of your mortgage needs.

Empire gives you two options for critical illness riders: CI Protect for basic coverage or CI Protect Plus for more comprehensive mortgage insurance coverage. And, the basic plan includes a small death benefit for free. Add their disability rider on top of that and you have a great mortgage protection strategy.

 iA Mortgage Protection Insurance – Best for flexibility

Industrial Alliance (iA) is a great choice if you want mortgage protection that’s flexible and gives you a lot of different options. Most mortgage protection plans are used to cover expenses. But this one is specifically meant to help you cover outstanding debts and loans, including your mortgage.

iA lets you choose from many different options, like coverage type and length. They also give you options for more coverage with a disability credit rider and critical illness transition. Both of these add-ons give you even more options so you can get exactly the type of coverage you want.

💡 Tip: If you pick these rider options and decreasing coverage, you end up with a very strong mortgage protection plan.

UV Mortgage Protection Insurance – Best for riders

Many of the mortgage protection insurance products we’ve listed as the best in Canada give you options for riders — small add-ons you can buy for more coverage. But mutual Insurance company UV takes it a step further.

Their plan, Term Superior, is also offered as an optional rider. This is on top of their wide range of rider options for credit insurance, disability, and critical illness. And, you don’t need to do a medical exam or answer extra questions for their critical illness rider. It’s easy to see why we rated them the best for rider options!

UV’s plans also cover you for severe loss of autonomy for free. So, if you cannot perform at least 4 of the 6 activities of daily living before age 60, you will get up to 50% of the amount you were originally covered for.

UV’s Term Superior is also a great choice if you have multiple financial responsibilities. It helps if you want to use a strategy called laddering to get additional coverage for a low cost.

Scotiabank Mortgage Insurance Review

Scotiabank’s mortgage insurance will cover you in 4 different scenarios:

• If you suddenly die (life insurance)
• If you are diagnosed with a covered critical illness
• If you become disabled and cannot work
• If you lose your job/monthly income

They each will cover a decent amount of your outstanding mortgage debt. But the devil’s in the details. Only a certain amount of your outstanding debt will be covered. And only certain illnesses, disabilities, or circumstances will be covered.

Product details:

• Available Term Lengths: Up to age 70
• Available Term Types: Decreasing coverage
• Maximum Amount of Coverage: $1,000,000

Pros:

• Additional options to cover mortgage costs: life insurance, critical illness insurance, disability insurance, and job loss insurance
• Discounts for purchasing two or more insurance types and for mortgages over $350,000
• 30-day free look period

Cons:

• Only covers your mortgage, nothing else
• Only issued between ages 18 and 64, unless client has existing insured mortgage
• Job loss insurance only available with purchase of disability insurance policy
• Limited number of critical illnesses covered (life-threatening cancer, acute heart attack, or stroke)
• Restrictions on coverage for disability, critical illness, and job loss

To learn more about how mortgage default insurance works and how much it costs, head to our CMHC Mortgage Default Insurance Calculator.

Frequently asked questions

Do I have to have mortgage insurance?

Not necessarily. You may need to have Mortgage Default Insurance or CMHC Insurance in some circumstances. But you are not obligated to buy the mortgage insurance your bank is offering.

Instead, you should think about getting private mortgage insurance or mortgage protection insurance. They’re two terms that mean the same thing.

Mortgage protection insurance is sold by a third party, such as an insurance company or insurance broker like PolicyAdvisor.com. It is usually cheaper, gives you better coverage, and is more flexible — you can use it for anything you need, not just the mortgage.

Is private mortgage insurance worth it?

Yes, private mortgage insurance is worth it. It gives you more bang for your buck than creditor mortgage insurance from a bank or lender does. That flexibility, the lower cost, and the better peace of mind make PMI worth it.

Plus, you can use our online platform to get personalized quotes for mortgage protection in minutes — much easier than it takes to go through getting mortgage insurance from a bank or lender!