Canadians with a mortgage buy 38% more life insurance — and why that's still not enough

That's why a mortgage is often a trigger to start thinking about life insurance. The PolicyMe data shows that "family well-being" ranks even higher than the mortgage as a reason to buy life insurance. This seems to suggest that Canadians aren't just thinking about paying off debt, but also about protecting their loved ones' financial future.

You can get a PolicyMe term life insurance policy with coverage up to $5 million. Premiums start at just $21/month — making it easier for you to secure your family’s financial future within minutes. Just answer four questions, and PolicyMe will provide you with an instant, no-obligation quote which is valid for up to 90 days. Most policies are approved without any medical tests, and you can opt for term lengths ranging from 10 to 30 years.

Should your coverage match your mortgage balance?

Buying enough life insurance coverage to cover your mortgage balance seems sensible. However, most Canadians choose to buy more.

According to PolicyMe's data, the average outstanding mortgage balance among customers was $451,681 in 2025. The average life insurance coverage was over 50% higher at $692,335.

That gap shows that people buy life insurance to protect their family's overall financial stability. If you only buy enough life insurance to pay off your mortgage, surviving family members may struggle to cover living expenses, especially since the income you were earning is presumably also gone.

The Canadian Life and Health Insurance Association says people typically use life insurance to protect their families against financial disruption that goes beyond a single debt.

How much more coverage do homeowners buy — and why ?

Homeowners tend to buy more life insurance than non-homeowners. But the detailed data from PolicyMe is even more revealing. For example, Canadians aged 25 to 29 with a mortgage buy 59.9% more coverage than their renting peers. That gap narrows for Canadians in their 30s as non-homeowners take on additional financial responsibilities and rises again at ages 45 to 49, where homeowners carry 55.0% more coverage.

There's another factor at play. Canadians are buying homes later. Between 2021 and 2026, the peak mortgage-holding age group moved from 30-34 to 35-39. According to the Canada Mortgage and Housing Corporation, higher home prices have forced first-time buyers to delay their entry into the housing market. That delay may have a knock-on effect with other big financial decisions like life insurance (1).

What's the difference between mortgage life insurance and term life insurance?

The type of insurance offered through your mortgage provider works differently from traditional forms of life insurance, such as term life insurance.

Mortgage life insurance is an optional insurance policy that pays the balance on your mortgage if you die. It's key to remember that as you pay down your mortgage, your premiums stay the same but usually cover an increasingly smaller amount of money. What's more, the insurance payout goes to your mortgage lender rather than someone you've designated beforehand (2).

Term life insurance pays out a fixed amount of your choice if you die within a specific period. The amount of the coverage does not decrease over time, and the payout goes to whomever you select as a beneficiary. "That's the key difference between regular mortgage protection insurance and term life – its flexibility allows you to protect your overall family financial wellbeing, instead of only covering a single expense," says Andrew Ostro, CEO of PolicyMe.

Despite providing a higher payout, PolicyMe says term life insurance often costs two or three times less than mortgage life insurance.

So how do you figure out the right amount of life insurance coverage?

When deciding how much coverage you need, consider all the financial demands that may fall on your dependents if you weren't around. A common rule of thumb in the industry is that your term life insurance coverage should be seven to 10 times your annual salary. But that's just to replace lost income. You also need to think about your mortgage, other debt that needs to be paid off, as well as ongoing and future expenditures like education and healthcare.

For example, if you earn $100,000 a year, have a $600,000 mortgage, an outstanding $20,000 loan on your vehicle, and plan to spend close to $50,000 on each of your two children for post-secondary education, you would need about $1.5 million in total life insurance coverage.