Bank Mortgage Insurance vs Personal Term Life: What Ontario Homeowners Should Know

When you close on a home in Ontario, the bank almost always offers mortgage insurance as a checkbox on the paperwork. It feels convenient, but there are a few things worth understanding before you sign.

Bank mortgage insurance is typically owned by the lender, not by you. The payout goes to the bank to clear the mortgage balance — which shrinks over time even as your premium stays the same. Your family does not get to decide how the money is used.

A personal term life policy works differently. You choose the coverage amount, you name the beneficiary, and the payout goes to your family tax-free. They can pay off the mortgage, cover living expenses, or keep the home and invest the rest. The choice stays with them.

If you'd like a plain-English walkthrough of the differences as they apply to your situation, I'm happy to explain in English or Farsi — no pressure, no jargon.