Bank-owned life insurance (BOLI) can mean a life insurance policy banks buy to insure the lives of their high-earning employees or board members. We'll focus on the other meaning of "bank-owned life insurance": personal life insurance that Canadians can buy via a bank.
Key takeaways:
Life insurance can be purchased via a bank, an insurance company, a broker or online insurtech companies like PolicyMe.
Canadians commonly buy life insurance from a bank if they already do their banking with one of the top providers like BMO, RBC or TD.
Banks may upsell/oversell you on life insurance when you buy another product, like a mortgage, because bank insurance agents are commissioned.
What's the best bank-owned life insurance in Canada?
The best bank-owned life insurance in Canada is RBC if you're looking at affordability. But that's just one consideration; your choice will depend on your specific needs.
For starters, here are sample rates for term life insurance from bank-owned insurers compared to PolicyMe term life insurance.
Here's a closer look at the top bank-owned life insurance companies with sample quotes (for a 34-year-old non-smoking man, coverage for $500,000 over 20 years):
BMO life insurance: best for stability
Takeaway:BMO has a wide range of life insurance products, which is good for customers that want options. But compared to other providers, there are more medical requirements at the time of application.
Sample quotes:
$32.40 per month for term life insurance
$283.16 per month for universal life insurance
Canada Life insurance: best for participating policies
Takeaway: Canada Life has the largest participating fund in Canada, sitting at $49B (compared to Sun Life's $16B and Manulife's $13B.) This makes them a viable choice for participating permanent life insurance.
Sample quote: $32.90 per month for term life insurance. Quotes for participating are not available without an advisor call.
CIBC: limited life insurance options
Takeaway: CIBC only has term lengths of 10 and 20 years. There is an option to convert your policy to a Term 100 plan (a type of permanent coverage).
Sample quote: $45.17 per month for term life insurance.
Desjardins: good range of life insurance products
Takeaway: Desjardins has the full range of life insurance products you'd expect most specialized insurance companies to have, including term and permanent life insurance options.
Sample quote: $31.50 per month for term life insurance.
Manulife life insurance: best for combined insurance
Takeaway:Manulife has a whole host of insurance products: term, permanent, universal, individual, joint, etc. There is also an option to combine different insurance products.
Sample quotes:
$32.62 per month for term life insurance
$195.75 per month for life, critical illness and disability insurance
RBC life insurance: best for term life options
Takeaway: RBC is the highest revenue bank in Canada. Their term life insurance options are quite wide-ranging, with rates that can be pretty competitive.
Sample quote: $31.23 per month for term life insurance.
Scotiabank: only available to Scotiabank customers
Takeaway: Scotiabank life insurance is only sold to their existing banking customers. As a result, they have less expertise in the insurance space.
Sample quote: $31.50 per month for term life insurance.
TD life insurance: best for TD customers
Takeaway: TD's life insurance isn't very differentiated with the rest of the market in Canada, but they do offer a discount for existing customers.
Sample quote: $36.98 per month for term life insurance.
The best alternative to bank-owned life insurance: PolicyMe
Takeaway: PolicyMe is a Canadian insurtech company that offers affordable term life insurance, with a no-brainer online application process. Here's why you might consider PolicyMe over a big bank:
Affordable: Premiums are between 5 to 20 per cent cheaper than other insurance solutions on the market in Canada.
Fast and simple: Apply online in 20 minutes or less. We've streamlined the risk assessment process so you get the same quality coverage, just faster!
Honest advice: Our non-commissioned advisors can give you personalized advice via phone or email, seven days a week, without the pushy upsell.
Responsive: Get an email response in one business day (versus three-plus days for a big bank). And a licensed advisor is often available to take calls immediately.
Backed by giants: PolicyMe is backed by federally-regulated insurance giant Canadian Premier.
Canadian bank-owned life insurance: pros and cons
Let's run through the different pros and cons of buying life insurance from a bank.
Buying life insurance through a bank may not be the best option for everyone. Need some pointers? Talk to a PolicyMe advisor for honest advice and no pressure to buy.
How do you buy bank-owned life insurance in Canada?
There are two main ways to buy a life insurance plan from a bank in Canada:
From the insurance division of a bank
Through a local or online independent insurance broker
Here's how to get the best life insurance from a bank in Canada
Let's get into some quick tips to get the best banked-owned life insurance Canada has to offer.
Financial health: Choose a bank in solid financial shape to ensure they have the cash to pay out your tax-free death benefit. But for the most part, most of the major banks are in good standing, even by global standards.
Underwriting process: The application will ask questions to find out how risky you are to insure and how much you should pay. Some providers have more complex or antiquated processes than others.
Application and policy delivery: How else can you speed up approval? Choose a bank that lets you apply and get your documents online. This way, you won't be at the mercy of snail mail or need to physically go into the bank.
Price: A lower price doesn't mean that a bank is shady. If one bank gives you a lower quote than another, it usually means that it's pricing the policy more aggressively to “win the sale”.
FAQ: Canadian bank-owned life insurance (BOLI)
Where can I purchase life insurance?
You can purchase life insurance policies from a few key sources in Canada. These include insurance companies, insurtech companies, brokers and banks.
Insurance companies are the most popular place, offering a wide range of policies, including term, universal and permanent life insurance. Banks also offer life insurance policies, but their selection is limited and they may not be able to give you the personalized attention you need. Ultimately, the best place to buy life insurance depends on your needs, budget, and preferences.
What are BOLI and COLI?
BOLI is an acronym used to refer to bank-owned life insurance. COLI is an acronym used to refer to corporate-owned life insurance.
While this article is focused on individual life insurance purchased from a bank, BOLI and COLI are sometimes used to describe life insurance purchased by a bank or a corporation. BOLI is used to offset employee compensation cost and employee benefits costs, like health insurance, group term life insurance and pension plans.
COLI is used for insurance on employees at the corporation. But instead of paying for employee benefits, it is used to finance executive benefits.
What is business-owned life insurance?
Business-owned life insurance is a life insurance policy that a company purchases on the lives of key employees, with the company being the policyholder and beneficiary.
Business-owned life insurance can also be a tax-efficient way for a company to recover the costs of providing employee benefits, like executive compensation or retirement benefits. The company pays the premiums. Upon the passing of the insured employees, the company gets tax-free death benefits.
Business-owned life insurance is another term for corporate-owned life insurance (COLI).
Our sources:
All quotes by Jordan Rodrigues, licensed life insurance specialist at PolicyPlan.ca have been pulled from a subject matter expert interview conducted in 2023. All reviews were fact-checked and updated with new information.
Term Life Insurance Quote Online | TD Insurance. (n.d.). https://www.tdinsurance.com/products-services/life-insurance/quote/en#!/
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