TD Mortgage Life Insurance Review: Updated for 2022

Looking for a review of TD mortgage life insurance because you want a life insurance plan to protect your loved ones from mortgage debt?

Our review will tell you how TD mortgage life insurance works, its pros and cons, pricing and alternative types of insurance.

What is TD mortgage life insurance?

TD mortgage life insurance, like other mortgage life insurance products, helps pay off your mortgage if you pass away. But it doesn’t give your family any kind of cash benefit.

Here is how TD mortgage life insurance works: 

  • You will pay monthly premiums based on your mortgage coverage
  • As you pay off your mortgage, your mortgage life insurance coverage decreases because there’s less of the mortgage to cover
  • And if you pass away while the policy is active, TD Insurance will pay off the remainder of your mortgage to your lender (the bank!)
  • Your family will not receive any cash from this kind of policy

Our TD mortgage life insurance review

Our rating: 1/5

Why do they score so poorly? There are some fundamental downfalls to the product that consumers need to know: 

  • TD mortgage life insurance offers coverage up to $1M but prices can be 75% higher than term life insurance premiums. 
  • The coverage from mortgage life insurance will pay for your remaining mortgage balance and interest.
  • But the payout goes straight to the mortgage lender and your family won’t get any money for other expenses.
  • If you’re worried about the financial burden a mortgage places on your family, consider getting a term policy.
  • So in the event you're no longer there to help with the mortgage, your family can pay it off and cover whatever else they may need (like tuition, childcare, time off work, etc.)

And just in case you weren't sure: mortgage life insurance is not mandatory. Even if your bank makes it seem like it is.

TD mortgage life insurance rates

TD mortgage life insurance rates depend on main two factors: your age and the initial value of your mortgage. 

If you apply with a co-borrower, like your partner, TD will give you a 25% discount on the sum of the premiums calculated for each of you.

Here’s what you can expect to pay for TD mortgage life insurance based on your age and mortgage amount:

Age Mortgage Amount TD mortgage life insurance rate per month
30 $250,000 $25
$500,000 $50
$1,000,000 $100
35 $250,000 $35
$500,000 $70
$1,000,000 $140
40 $250,000 $52.50
$500,000 $105
$1,000,000 $210
45 $250,000 $75
$500,000 $150
$1,000,000 $300

*Pricing based on publicly-available rates as of May 2020. Terms and conditions may apply.

Term life insurance policies are considerably more affordable and higher value, because payouts can be used for anything your family might need.

With PolicyMe, customers can save up to 20% on a term life insurance policy (and get more protection than with mortgage life insurance).

Pros and cons of TD mortgage life insurance

Pros of TD mortgage life insurance

  • Your insurance coverage can start as soon as your mortgage is approved
  • If the policy amount covers your whole mortgage, your family won’t be burdened with any mortgage debt if you pass away
  • If you develop an illness that becomes terminal within a year, you may be eligible for an early payout

Cons of TD mortgage life insurance

  • If the policy coverage is less than your actual mortgage and you pass away, your family will have to pay the rest of the mortgage themselves
  • There is a huge margin of error for application. The Globe and Mail reports, “Mortgage life insurance is typically underwritten post-claim. […] And people can be denied at that point.”
  • Your policy’s coverage will decrease as your mortgage balance decreases
  • Your family will not receive any cash benefit. So if they have funeral expenses or other costs, they’ll have to pay out of pocket
  • If you leave TD bank and move your mortgage to another financial institution, your policy will end
  • If you want to renew your policy, Global News reports, “Because you’re a bit older, your premium won’t necessarily go down — in fact, it'll probably go up.”

How does TD compare to other life insurance companies? Read full company reviews.

TD mortgage life insurance vs. term life insurance

TD mortgage life insurance compared to term life insurance is not as beneficial.

Here are some of the reasons why term life plans are better than TD mortgage life insurance:

1. Your payout amount decreases over time

With TD mortgage life insurance, your payout decreases over time but your premiums are level (they remain the same). In other words, over time, you’ll get less and less for what you pay.

For example, if your initial mortgage amount is $500,000, you’ll pay premiums based on $500,000 of coverage. And you’ll continue to pay this amount in premiums even when you have only $250,000 or $100,000 left to pay off.

With term life insurance, you still get a level premium and your coverage is the same until the policy ends. 

Want to know how much life insurance you’ll need to cover your mortgage and other expenses? Try our life insurance calculator. It will use your personal circumstances to give you an estimate.

2. It's way more expensive

TD mortgage life insurance tends to be more expensive than term life insurance. This is because mortgage life insurance is a type of simplified issue life insurance. 

This means you don’t have to complete a thorough underwriting process that’ll scrutinize your health history and lifestyle as you might have to for a term insurance policy.

But because your bank won’t know how risky you are to insure, they’ll usually compensate by charging you more for insurance.

3. Term life insurance is the better option

Term life insurance is usually the better option for protecting your family against mortgage debt because it offers more comprehensive coverage

Here are some of its benefits:

  • Your beneficiaries will get the death benefit, not your mortgage lender. And they can use the tax-free lump sum to pay for anything they want
  • You can get coverage equal to or more than your mortgage (both payout and term length). And coverage does not decrease as you pay off your mortgage
  • It’s typically more than mortgage life insurance. This is because you buy it for a fixed period of time and undergo medical underwriting

In fact, term insurance premiums can be almost 75% cheaper than the four most popular mortgage life insurance products, which include TD mortgage life insurance.

Here’s how rates for mortgage life insurance and term life plans stack up:

$500,000 of TD mortgage life insurance $500,000 of term life insurance
Male, aged 30 $70 / month $30 / month
Female, aged 30 $70 / month $22 / month
Male, aged 40 $150 / month $49 / month
Female, aged 40 $150 / month $35 / month
Male, aged 50 $270 / month $130 / month
Female, aged 50 $270 / month $86 / month
Pricing based on publicly-available rates as of May 2020. Terms and conditions may apply.

See how affordable protection can be with a no-obligation life insurance quote.

“Most of the larger mortgage providers only cover 4 conditions,” explains Insurance Advisor Erik Heidebrecht.

The less conditions covered, the lower the probability that you'd actually be able to make a claim on that policy.

The result is that you end up paying for critical illness policy that you have a very, very low chance at getting a payout for.

PolicyMe has some of the lowest term life insurance rates in Canada, so your family doesn't need to worry about the mortgage if you pass away.

Applying can take 20 minutes and at the same time, you can apply for the most comprehensive critical illness coverage in Canada — with 44 illnesses and conditions.

Bottom line: TD mortgage life insurance is not worth it

  • TD mortgage life insurance is typically more expensive than a term life insurance policy. 
  • Mortgage life insurance doesn’t offer coverage beyond your mortgage balance. So it’s not as useful for your family compared to term life products.
  • A term life policy can give you affordable coverage that makes you and your family feel financially protected.

FAQ: TD mortgage life insurance

Is TD mortgage life insurance worth it?

No, TD mortgage life insurance isn’t worth it because it’s less comprehensive and usually more expensive than other life insurance products. Also, the payout will go to your mortgage lender, not your family.

Term life insurance is a better option because you can still get enough coverage to pay off your mortgage. 

And the death benefit from term insurance will go to your beneficiaries as a tax-free lump sum. They can use this money to pay for the mortgage and other life expenses.

Is TD bank mortgage life insurance expensive?

Yes, TD bank mortgage life insurance is usually expensive compared to other types of life insurance like permanent insurance and term insurance.

Before making any financial decisions, shop around and consider your different options. 

You can also talk to licensed advisors to discuss the cost of life insurance and weigh your options. For example, if you should get a 20-year term policy or permanent coverage.

Does TD mortgage life insurance require a medical exam?

No, TD mortgage life insurance does not require a medical exam or medical questions. But, this means the bank is assessing you the same as all other applicants: high-risk. 

So regardless of your current health and medical history, you might be paying a higher premium for mortgage life insurance compared to, for example, term life insurance.

 

Still looking for the right life insurance? Read more reviews of Canadian life insurance companies:

Laura McKay

COO & Co-Founder

About the Author

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