Life Insurance for New Homeowners in Canada: What You Need to Know

Buying a Home Is a Major Financial Commitment

For most Canadians, a mortgage is the largest debt they'll ever carry. When you take on that obligation, you're also taking on the responsibility of protecting your family if you're no longer around to make those payments.

That's where life insurance becomes essential — not optional.

Mortgage Life Insurance vs. Term Life Insurance

When you close on a home, your bank will likely offer you mortgage life insurance. It sounds convenient, but it's often not the best value. Here's why:

• Bank mortgage insurance pays the bank, not your family. The benefit goes directly to your lender to pay off the mortgage — your family gets nothing extra.

• Coverage decreases as your mortgage decreases. Your premiums stay the same, but the payout shrinks over time as you pay down the principal.

• It's not portable. If you switch lenders or refinance, you lose the coverage and have to requalify.

Term life insurance, by contrast, pays your family directly. They can use the money however they choose — pay off the mortgage, cover living expenses, or invest it for the future.

How Much Coverage Do New Homeowners Need?

A good starting point is your full mortgage balance plus enough to cover 1-2 years of living expenses for your family. If you have dependents, factor in income replacement as well.

For example, if you have a $600,000 mortgage, two young children, and earn $90,000 per year, a $1,000,000 term policy for 25 years would be a reasonable baseline.

When Is the Best Time to Buy?

The best time to buy life insurance is as early as possible. Premiums are based primarily on your age and health — the younger and healthier you are when you apply, the lower your rate will be for the life of the policy.

Get the Right Coverage Through PureTerm

PureTerm connects new homeowners with licensed Canadian brokers who compare 15+ insurers to find the right term life policy at the best rate. Use our free coverage calculator to get your personalized estimate in minutes.