Life Insurance Through Your Bank vs an Independent Broker in Canada
Many Canadians are offered life insurance through their bank when applying for a mortgage, loan, or credit card. Others explore coverage through an independent broker. While both options can provide protection, they work very differently.
This guide explains the key differences in simple terms, so you can decide what feels right for you—without pressure.
How Bank Life Insurance Typically Works
Life insurance offered by banks is often tied directly to a specific product, such as a mortgage or loan. The coverage is usually designed to pay off that debt if something happens to you.
Because it’s offered during another transaction, many people accept it quickly without fully reviewing their options.
Common characteristics of bank life insurance include:
- Coverage linked to a specific loan or credit product
- Benefits that decline as your debt is paid down
- Limited flexibility or customization
- Underwriting that may happen after a claim is made
For some people, this convenience feels appealing. For others, it raises questions once they look closer.
How Life Insurance Through an Independent Broker Works
Independent brokers help compare life insurance options from multiple insurance companies. Coverage is based on your needs, not a specific loan or product.
Policies are typically fully underwritten upfront, meaning eligibility is confirmed before coverage begins.
Common characteristics of broker-arranged life insurance include:
- Coverage that stays in place regardless of your lender
- Flexible policy options and coverage amounts
- Clear underwriting before the policy starts
- The ability to adjust coverage as your life changes
This approach often gives people more control and clarity over their protection.
Key Differences to Be Aware Of
The biggest difference between bank life insurance and broker-arranged coverage is who the insurance is designed for.
Bank insurance is designed to protect the lender. Independent life insurance is designed to protect your family or beneficiaries.
With independent coverage, the payout goes directly to the people you choose, rather than being limited to paying off a specific debt.
Which Option Is Right for You?
There’s no single right answer for everyone. The best choice depends on your goals, budget, and how much flexibility you want.
Bank insurance may appeal to people who value simplicity and convenience in the moment. Independent life insurance may suit those who want clarity, control, and coverage that stays with them long term.
Many Canadians take time to explore both before deciding.
Taking a Calm, Informed Approach
Life insurance doesn’t need to be rushed or confusing. Understanding how different options work helps you make decisions that feel confident and considered.
At LifeSimple, we help Canadians explore their life insurance options clearly and without pressure—so they can move forward at their own pace.
Ready to Explore Your Options?
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