Lender Insurance vs. Your Own Policy

Lender mortgage insurance or your own policy?

Your lender may offer life insurance with your mortgage. It pays the lender what is left on the mortgage. A policy you own pays your family a set amount. Enter your mortgage to see the difference over time.

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More for your family$0

The figures below are examples. Replace them with your own.

What each one would pay over time

The lender's coverage follows your mortgage balance down. Your own policy stays level. The gap between the lines is what your family would keep. This chart updates with your numbers.

Your own policyLender insuranceLeft for your family

Show these numbers as a table

If you died	Lender insurance	Your own policy	Left for family

How they usually compare

Insurance offered by a lender is often called creditor insurance or mortgage life insurance. It is optional, and it is not the same as mortgage default insurance. Here is how it usually compares with a term life policy you own yourself.

Lender mortgage insurance

Who receives the money: The lender
Coverage amount: Usually falls with your mortgage balance
What you pay: Usually the same premium while coverage falls
If you switch lenders: Usually ends, and you apply again at your new age and health
Health questions: Often a few yes or no questions, which can be reviewed when a claim is made
Who owns the policy: The lender's group plan
What it covers: The mortgage only
When the mortgage is paid off: Coverage ends

Your own policy

Who receives the money: The beneficiary you choose
Coverage amount: Stays level for the term
What you pay: A premium set when you buy, usually level for the term
If you switch lenders: Stays with you
Health questions: Reviewed when you apply, before the policy starts
Who owns the policy: You
What it covers: Any need your family has
When the mortgage is paid off: Continues until the term ends

Details vary by lender, insurer and product. A broker can compare both for you.

When lender insurance can still make sense

You want cover in place right away: it can be set up with your mortgage in one step, and you can replace it later.
Your health makes an individual policy hard to get: a lender's plan may accept you with fewer questions. Read what it excludes.
The amount is small or short term: for a small balance that will be paid off soon, the simpler option may be enough.
Keep it until your own policy is approved: if you plan to switch, do not cancel lender insurance until the new policy is in force.

How we work out the numbers

Lender insurance: we show the mortgage balance still owing at that point, because that is what the lender's coverage would pay off. Your balance is worked out from your rate and the years left, with interest compounded twice a year.
Your own policy: we assume a level term life policy equal to your mortgage balance today, kept for all the years left on the mortgage.
Left for your family: your own policy's payout minus the mortgage still owing at that point.
Not included: the cost of either option, which depends on your age, health and the insurer. A quote shows you that.

Keep planning your protection

Mortgage Protection CalculatorThe life, critical illness and disability amounts for your mortgage.Work out your coverage Mortgage Payment CalculatorYour payment, interest and what you still owe.Check the payment Mortgage Affordability CalculatorThe highest home price you could be approved for.Check what you can afford

This comparison is for education only. It is not advice and it is not an offer of insurance. Lender insurance plans differ, so read the certificate of insurance your lender gives you. Coverage and cost for an individual policy depend on underwriting by the insurer, including your age and health. Do not cancel existing coverage until new coverage is in force.

See what your own policy would cost

Start a mortgage protection quote online, then review it with a licensed BC broker.

See What Your Own Policy Costs Talk to a Broker

Common questions

Lender insurance pays your lender what is left on the mortgage. A policy you own pays the full amount to the person you name, who can use it for the mortgage or anything else.

Yes. It follows your mortgage balance, so it shrinks as you pay the mortgage down, while the premium usually stays the same. A term policy you own keeps the same coverage for the whole term.

Lender insurance usually does not move with you. You would apply again with the new lender, at your age and health at that time. A policy you own stays in place wherever your mortgage goes.