Why TD Mortgage Life Insurance Costs More Than You Think
Why TD Mortgage Life Insurance Costs More Than You Think
Last spring, a 34-year-old couple in Mississauga sat down at their local TD branch to finalize a $450,000 mortgage. Between signing documents and shaking hands, their advisor slid over a pamphlet for TD Mortgage Protection Insurance. "It's just $78 a month," she said. "Peace of mind." They signed without thinking twice. Twelve months later, they'd paid $936 in premiums for coverage that had already dropped by $18,000, because as they paid down their mortgage, their protection shrank right along with it. They had no idea.
They're not alone. According to the Canadian Life and Health Insurance Association (CLHIA), over 4.5 million Canadians hold some form of creditor insurance through their bank. And a 2023 study by the Financial Consumer Agency of Canada (FCAC) found that most borrowers don't fully understand what they're buying at the point of sale.
What TD Mortgage Protection Actually Costs
TD offers mortgage life insurance through TD Insurance. For a 35-year-old non-smoker with a $400,000 mortgage, premiums typically run between $68 and $85 per month. That's roughly $16,000 to $20,000 over 20 years.
Here's what most people miss. That coverage is declining balance. Your premium stays flat at $78/month, but the actual death benefit shrinks every single month as you pay down your mortgage. By year 10, you're paying the same $78 for maybe $240,000 in coverage. By year 18, you're paying $78 for $60,000 in coverage.
You're paying more per dollar of protection every year and you probably never noticed.
The Numbers Side by Side
According to rate data from Canadian insurance carriers, a healthy 35-year-old non-smoker can get a 20-year term life policy for around $28 to $35 per month for $400,000 in level coverage. That coverage doesn't shrink.
| TD Mortgage Insurance | Independent Term Life | |
|---|---|---|
| Monthly premium | ~$78 | ~$32 |
| Coverage year 1 | $400,000 | $400,000 |
| Coverage year 10 | ~$240,000 | $400,000 |
| Coverage year 20 | ~$20,000 | $400,000 |
| 20-year total cost | ~$18,720 | ~$7,680 |
| Beneficiary | TD Bank | Your family |
| Portable | No | Yes |
The difference is roughly $11,000 over the life of the mortgage. And the independent policy pays your family directly, not the bank.
Post-Claim Underwriting: The Part Nobody Talks About
A 2019 CBC Marketplace investigation found multiple cases where Canadian banks denied creditor insurance claims after the policyholder died. The reason is something called post-claim underwriting.
When you sign up for TD mortgage insurance, the health questions are minimal. A few checkboxes at the branch. But the real medical review doesn't happen until someone files a claim. So your family could pay premiums for 15 years, then get denied because of a health condition that wasn't properly disclosed on a form you barely remember filling out.
With a standard term life policy, underwriting happens upfront. Blood work, medical records, the whole process. Once you're approved, you're approved. No surprises for your family later.
What About Portability?
If you switch from TD to another lender at renewal, your TD mortgage insurance doesn't come with you. You lose it. And if your health has changed since you first signed up, you might not qualify for new coverage at the same rate.
A personal term life policy follows you no matter where your mortgage goes. Switch banks five times, it doesn't matter. The policy is yours.
The Bottom Line
TD mortgage life insurance isn't a scam. It's a product that's convenient for the bank and expensive for you. A 35-year-old couple could save over $11,000 by spending 10 minutes comparing options on a site like SmartMortgageInsurance.com instead of signing the form their banker put in front of them.
So if you signed up for mortgage insurance at the TD branch without comparing, the real question is: do you know exactly how much coverage you're paying for right now, and is it still worth it?