Homeownership pushes coverage higher as buyers seek broader financial protection beyond debt
A growing number of Canadians are turning to life insurance as a safeguard against mortgage-related risk, with new data suggesting housing debt is a major force shaping both coverage decisions and amounts.
Findings from PolicyMe’s 2026 snapshot show that while protecting family remains the primary motivation for buying term life insurance, mortgages rank as the second most cited reason, mentioned by 42.3% of applicants.
The link between the two is straightforward: a mortgage represents a significant financial obligation that does not disappear if the primary income earner dies. As a result, many Canadians are structuring life insurance policies to ensure their families can remain in their homes and maintain financial stability.
Higher stakes, higher coverage
The data reveals a clear divide between homeowners and non-homeowners when it comes to coverage levels. Canadians with mortgages purchase substantially more insurance, selecting an average of $762,660 in coverage compared to $553,124 among those without home loans — a difference of nearly 38%.
In practical terms, homeowners are most likely to opt for $1 million in coverage, while non-homeowners tend to settle closer to $500,000.
This gap reflects more than just outstanding mortgage balances. Buyers are factoring in broader financial needs such as income replacement, childcare, and ongoing living expenses, rather than focusing solely on debt repayment.
While many assume life insurance should match the size of a mortgage, the data suggests otherwise. In 2025, the average outstanding mortgage among PolicyMe customers stood at $451,681, yet the average coverage selected was $692,335 — more than 50% higher.
This difference highlights a shift in mindset, with Canadians increasingly viewing life insurance as a tool for comprehensive financial protection rather than a single-purpose product.
Joint applications also play a role. Among mortgage holders, 44.1% applied for coverage with a partner, compared to 36.2% of non-homeowners, underscoring how shared debt often leads to shared planning.
Homeownership trends reshape insurance behaviour
The timing of homeownership is also evolving, and with it, insurance purchasing patterns. The largest group of mortgage holders has shifted from those aged 30–34 in 2021 to those aged 35–39 in 2026, signalling that Canadians are entering the housing market later in life.
Today, nearly 78% of mortgage-holding applicants fall between ages 30 and 44. These individuals also report higher incomes — roughly $109,500 on average — compared to $84,500 for non-homeowners.
Younger buyers, however, are taking on the greatest relative risk. Canadians aged 25–29 with mortgages are requesting nearly 60% more coverage than their non-homeowning peers, reflecting a combination of high debt and limited savings early in their financial journeys.
Coverage differences narrow over time as mortgages are paid down, children become financially independent, and overall liabilities decline.
Although mortgages often trigger the initial interest in life insurance, many Canadians are opting for term life policies rather than traditional mortgage insurance products.
“What we’re seeing is that life insurance decisions are less about a single obligation and more about protecting overall financial stability. The mortgage may be the starting point, but it’s rarely the full picture, since Canadians are also thinking about day-to-day living expenses, household responsibilities, and their long-term financial security. That’s the key difference between regular mortgage protection insurance and term life – its flexibility allows you to protect your overall family financial wellbeing, instead of only covering a single expense.” — Andrew Ostro, CEO of PolicyMe
Unlike mortgage insurance, which typically declines as the loan balance shrinks, term life policies maintain a fixed payout and can be used for a range of financial needs. They also tend to be significantly more affordable, often costing a fraction of comparable mortgage-specific coverage.
