Life insurance when you buy your first home

What will I be offered at the bank?

When you sign the mortgage, the lender will usually offer its own mortgage life insurance, and sometimes disability and critical illness coverage with it. It takes a few minutes to accept, and you are free to decline it.

The alternative is a personal term life policy for the same amount. The differences are who is paid, whether the amount falls as you pay down the mortgage, and whether the coverage follows you to another lender. The comparison table is on the mortgage protection page.

When should I arrange coverage?

1. After the offer is firm. You know the mortgage amount and the closing date.
2. Apply right away. Underwriting can take from a few days to a few weeks.
3. Have the policy in force by closing. If it is not ready, you can take the lender's coverage and cancel it once your own policy is active.

How much should a first-time buyer consider?

At minimum, the mortgage balance, so the home is paid for. Many buyers add enough to replace a few years of income, because the costs of running a home continue after the mortgage is gone. Use the calculator for a starting figure.

If two incomes carry the mortgage, both people need coverage.

What about the three kinds of "mortgage insurance"?

They are easy to confuse:

• Mortgage default insurance (CMHC, Sagen, Canada Guaranty) protects the lender if you stop paying. It is required with less than 20 percent down.
• Lender's mortgage life insurance pays the lender the balance if you die.
• Personal term life insurance pays your family an amount you choose.

Only the last two protect your family's home, and only the last one pays your family directly.

Written and reviewed by Sandeep Singh Pawar, licensed life insurance agent in Ontario. Last reviewed November 10, 2026.