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Mortgage Insurance in Canada: Is It Mandatory?

Family sitting on floor of house with boxes around them.
July 23, 2020
Updated: January 7, 2024


You’re fully capable of making your mortgage payments right now. But a lot can happen in the 5–30+ years it takes to pay off a mortgage.

If you were to get sick, injured, or (sadly) pass away before your mortgage was paid off, that 5, 6, or 7-figure debt falls on your loved one’s shoulders. Or at least, that’s what would happen, if you didn’t have mortgage insurance in place to protect them.

So even though Mortgage Insurance isn’t mandatory in Canada—and yes, it is an extra monthly expense—we highly recommend it. Because the peace of mind it provides you and your loved ones is unmatched.

Get A Free Mortgage Insurance Quote

Already know you need or want mortgage insurance? Reach out! We’ll get you started with a free quote and help you shop around to find the best coverage at the best price.

Get To The Answers You Need Most!

What Is Mortgage Insurance?

Mortgage Insurance was developed on the premise that debt should die with the debtor. In other words, if an insured homeowner passes away or can’t pay their mortgage for other reasons, Mortgage Insurance makes sure that no financial obligations are left for others to handle.

In Canada, Mortgage Insurance is designed to protect either the financial institution providing your mortgage (through Creditor Insurance), or you, as the insured homeowner (through an individual policy).

Is Mortgage Insurance Mandatory in Canada?

In short, no, Mortgage Insurance is not mandatory in Canada, but some financial institutions may require it in order to approve your mortgage.

What Does Mortgage Insurance Cover?

Mortgage Insurance covers any debt left on your mortgage in the event that you can’t finish paying it off. It’s important to note that this money can’t be used for anything else if it’s purchased as a creditor insurance policy (through a financial institution). – if you’re looking to pay off your mortgage debt and have a little left over for your loved ones, read on and learn about purchasing mortgage insurance as part of a life insurance policy.

Having it ensures that your mortgage balance will be paid off if you were to pass away, which protects your loved ones from any financial strain they might experience otherwise.

In that case, the insurance money you’d receive would go directly to your bank or lender to pay off the remaining principal of your mortgage (up to a certain amount, depending on your policy).

Accident & Sickness Coverage

Most insurers give you the option to add-on Accident and Sickness coverage (also known as Disability Insurance). This way, if you were to become sick or injured to the point where you could no longer work, your insurance proceeds would cover your mortgage payments.

Should I Get Mortgage Insurance?

Ideally, yes! We highly recommend getting mortgage insurance because it’s in your best interest. If you were to get sick, become injured, or pass away before your mortgage was paid off, Mortgage Insurance would make sure that your debt obligations could continue to be met without negatively impacting your loved ones financially.

How Much Is Mortgage Insurance In Canada?

Mortgage Insurance costs vary greatly. We’ve seen policies as low as $30 per month, but we’d say that the monthly cost of an average plan is between $75-$100 per month.

The premium you pay will be specific to you and based on individual factors like:

  • The amount of your mortgage
  • The coverage term
  • Your age and gender
  • Your smoking status
  • Your health

Can You Cancel Mortgage Insurance In Canada?

Typically you can if you’re within 30 days of buying!

Mortgage insurance usually has a 30-day “free look” period. During this time, if you were to cancel your policy, you’d get refunded the premiums you paid up until that point. Ask your financial institution about the “free look” period before signing up for your mortgage protection insurance policy.

How To Get Mortgage Insurance

There are two ways to purchase and secure Mortgage Insurance:

1. Through Your Financial Institution

When you purchase Mortgage Insurance through your financial institution, you’ll pay a premium (usually a monthly amount). That payment is either made on its own or tacked on to your mortgage payment. This is a form of group insurance– you will have to answer some medical questions before being approved.

Remember: any benefit payable will go directly to the financial institution to pay off your remaining insured mortgage balance.

2. As Part of a Life Insurance Policy

Another option is to purchase an individual life insurance policy in an amount large enough to cover any unpaid mortgage debt. Then, you’ll either assign the proceeds of your insurance policy to the financial institution that gave you your mortgage, or to a beneficiary of your choosing you could use the money to pay off your mortgage in one lump sum. (Usually, this person would be a close family member or friend.)

This option provides more flexibility and options for your beneficiaries and is a personalized policy that is underwritten by an insurance company before you buy it.

Protect Your Family With Mortgage Insurance

Want the peace of mind mortgage insurance offers? We’ll make sure you get the best rates possible.

As Insurance Advisors, we represent you—not the insurance companies. It’s our job to find you the best plan for the best price. And it all starts with a free online quote!