Mortgage insurance or term life: both protect the mortgage, differently.

Mortgage life insurance, also called creditor insurance, pays the outstanding mortgage balance directly to the lender if the insured borrower dies — the client's family never sees the money, because it goes straight to paying off the loan. A personal term life policy pays its full, pre-set death benefit directly to the beneficiaries the client names, who can use it for the mortgage, other debts, income replacement, or anything else.

The coverage amount also moves differently over time: creditor insurance typically declines as the mortgage balance is paid down, while a term policy's benefit stays level for the length of the term regardless of how much mortgage is left.

That difference matters most in a family's worst-case scenario. Creditor insurance pays exactly one bill — the mortgage — and nothing else, regardless of what other financial needs the family actually has at that moment. A level term policy sized to cover the mortgage plus other obligations gives the family the choice of paying off the mortgage, covering income replacement, or some mix of both, rather than having that decision made in advance by the product itself.

No — credit or loan insurance is confirmed by the Government of Canada as optional, and federally regulated financial institutions cannot pressure a client into taking it or treat it as a condition of loan approval. Clients need to give express consent before it's added, and it can be flagged and declined at signing without affecting the mortgage itself.

In practice, though, the offer typically shows up at the exact moment a client is signing a stack of closing documents and just wants to be done — which is precisely why the express-consent requirement exists, and why a broker walking a client through the decision beforehand, rather than leaving it to the lender's closing package, actually matters. A client who's already thought it through arrives at signing ready to make a real choice instead of a default yes.

Term life insurance is medically underwritten before the policy is issued — the insurer assesses health and risk upfront, and once approved, the payout is contractually guaranteed for anything disclosed and accurate at application. Many bank-issued creditor insurance products work differently: full health assessment can happen at claim time rather than at application, which means a claim can be reviewed — and potentially denied — based on medical history at that later point, even after years of premiums were paid.

This isn't a reason to dismiss creditor insurance outright — it's usually easier and faster to get approved for, with little or no medical questionnaire at the outset, which genuinely suits a client who wouldn't qualify for term life at a reasonable rate. The point for a broker is simply to make sure a client understands which underwriting model they're accepting, and when, rather than assuming both products carry the same certainty of payout once the premiums start.

A personal term life policy is the client's own contract with the insurer, and it stays in place regardless of which lender holds the mortgage — switching lenders at renewal, discussed in short-term vs. five-year fixed, doesn't touch it. Creditor insurance tied to a specific mortgage generally isn't portable the same way, and moving to a new lender can mean reapplying for coverage from scratch, potentially at an older age and a new premium.

This is a conversation worth having early with a client, alongside the rest of the mortgage-professionals advisory conversation at Treadstone's broker resources, not left until a lender's closing package puts the decision in front of the client with no comparison point.