Best Life Insurance Through a Bank for Canadians

Thinking of buying life insurance? You’ve got options, including bank owned life insurance! 

While some opt to find a policy through a dedicated insurance company, others choose to look at bank owned life insurance to partner with their current banking habits. There are a ton of options through your bank, including BMO Insurance, RBC Insurance, or TD Insurance. 

A major pull for bank owned life insurance? You have all of your financial products under one roof. You can access your chequing and savings accounts, credit cards, mortgage, and life insurance through the same online portal. And if you’ve had a good experience with your bank in the past, you might be more inclined to trust them with your money and insurance coverage. 

Even if you know that you want to buy your life insurance policy from a bank, you still have to decide which bank to choose. And even if you currently bank with just one financial institution, you might still be curious about whether another bank can offer you a better deal on your coverage. 

That’s why in this article, we tell you how to find the best life insurance through a bank and share some tips for finding the best life insurance in Canada (so be sure to read to the end!).

Why Life Insurance is Important

Life insurance is one of the most important purchases you can make. Why?

Life insurance protects the people who are financially dependent on you. It ensures that they’ll have enough money to pay for their expenses if you die unexpectedly and your income disappears. It won’t help with the emotional pain of losing a loved one, but it does cushion the financial loss.

When you buy an insurance policy, you agree to pay monthly premiums to cover the cost of your coverage. If you die while holding your policy, your insurer will have to cough up money to pay out a death benefit to your beneficiary (or beneficiaries). A death benefit is a tax-free lump sum payment that your beneficiary can use in any way they want (like to pay off a mortgage or cover the cost of competitive gymnastics lessons). 

How to Buy Bank Owned Life Insurance

In Canada, there are 3 ways to buy an insurance policy from a bank: 

  • Directly from the insurance division of a bank
  • Through a local independent insurance broker
  • Through an online independent insurance broker

If you work directly with the insurance division of a bank, you’ll receive options and quotes for coverage from that bank only. After all, banks want to sell you their coverage, not someone else’s. 

In comparison, if you work with an independent insurance broker, you’ll receive options and quotes from multiple insurance providers. This will let you see how the rates for a particular bank compare to rates from other banks and even rates from a dedicated insurance company. 

To give you some ballpark estimates, here are sample rates for life insurance coverage from major Canadian banks:

Insurance Provider Monthly Price Annual Price
RBC Life Insurance Company $26.64 $296.00
BMO Life Assurance Company $28.80 $320.00
TD Insurance $43.00 $492.00

Prices based on rates on September 1, 2020. It is a 20 year term plan for a 35-year old male, non-smoker valued at $500,000.

How to Find the Best Life Insurance through a Bank

Want to make sure you’re getting the best life insurance through a bank? Here’s what to consider when sizing up different financial institutions in Canada:

  • Financial health: Just like when you buy a policy from an insurance company, you want to be sure that your bank will still be around to pay out your death benefit if something happens to you. For the most part, most of the major banks in Canada are in solid financial shape, even by global standards. So you can sleep a bit easier knowing that it’s extremely unlikely that the bank you choose will go under during your policy term. 
  • Options for coverage: Different banks offer different options for insurance coverage. To find the best fit for you and your family, take a look at your needs and the types of policies that different banks offer. 
  • Underwriting process: Do you need coverage today or can you wait for a potentially longer underwriting process? When you apply for life insurance, your provider will ask questions about your medical history and lifestyle to determine how risky you are to insure and how much they should charge you for coverage. Some insurance providers have more complex underwriting processes or take longer to complete them. So if you want coverage faster, look for a bank that’s known for speedy application processing.
  • Application and document delivery: Looking for other ways to speed up the approval process? Choose a bank that lets you submit applications and receive policy documents electronically. This way, you won’t be at the mercy of snail mail or scheduling time to go into the bank. 
  • Price: Think a lower price means that a bank is trying to do something shady? It doesn’t. If one bank gives you a lower quote for the same type of coverage, it usually just means that it’s pricing the policy more aggressively to “win the sale”. So if two banks are offering you the same kind of coverage, it’s safe to pick the cheaper one

So, What’s the Top Pick for Bank Owned Life Insurance?

You can get solid life insurance coverage from any major Canadian bank that sells policies. But when it comes to identifying the best life insurance through a bank, BMO tops our list

If you decide to start looking at their options, you can browse through BMO Insurance, which is part of BMO Financial Group. BMO has a Financial Strength Insurer A rating, which makes it a very safe bet as an insurance provider. 

What places BMO ahead of the other major Canadian banks? 

Two main factors – Flexibility and affordability. 

It offers a range of policy options to suit a variety of insurance needs. And it has some of the most competitive rates in the industry. 

Just be prepared for a bit of a wait: Because of its medical underwriting requirements and paper document delivery, it takes about 4-6 weeks to get approval on a policy.

Bank owned life insurance can be a great product, especially when you have had a positive experience with other financial products under their brand already. 

When you’re informed of all the options available to you, you can rest easy knowing that you found the best life insurance in Canada for your needs, bank owned or not.

Laura McKay

COO & Co-Founder

About the Author

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