RBC Mortgage Life Insurance

by Glenn Cooke

09/12/22

Looking for RBC Mortgage Life Insurance? Know what you’re buying – we’ve read the contract and here’s what you need to know:

Eligibility:

Ages 18-66, policy terminates at age 70.
Maximum coverage amount: $750,000

When you can cancel coverage:

You may cancel the coverage at any time by contacting RBC’s Insurance Service Center (Note: never cancel life insurance until you have sufficient replacement life insurance in force).

When your coverage is cancelled:

  • The date the mortgage is paid in full or discharged.
  • If your mortgage principle increases.
  • The last day of the month that you turn 70.
  • The date that the group policy terminates (note that RBC’s mortgage life insurance is a contract between RBC and Canada life – you do not control when that policy terminates.).

Who Owns The Policy?

This is group mortgage life insurance, so RBC owns the policy.

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Beneficiary

The beneficiary of the life insurance is RBC (not your named beneficiaries or family). Any claim amount is used to pay down the mortgage – but may NOT pay off the full amount. See the coverage amount section below.

Still Have Questions?

We have insurance experts available to answer all your questions.

Underwriting

Underwriting is generally a series of yes/no questions. However, no underwriting (evaluation of your ability to qualify for coverage) is done when you apply. Instead, RBC uses what is known as post-claim underwriting. This means that they review your application after you die, in order to determine if you actually qualified for coverage. If they find that you did not qualify, then your claim is denied.

Coverage amounts:

Maximum coverage is $750,000. If your mortgage amount when you apply exceeds $750,000 then you are only covered for a prorated amount of your mortgage (and thus, your entire mortgage may not be paid off).

Example: If the mortgage balance was $1,000,000 at the time of the insurance application and the balance owing at the date of death is $500,000, the benefit payable is $750000/$1000000 X $500,000=$375,000. 

Your coverage is not level. Instead it declines along with your mortgage balance.
In addition, if you have two people insured with RBC mortgage life insurance they will pay only one claim. This means that if two spouses are insured for the same mortgage, then you’re paying for two people to be insured but only one death claim will be paid.

Premiums:

Premiums are level over the term of your mortgage (often 5 years, if you’ve selected a 5 year term mortgage rate).

Provincial sales tax is also added onto your premiums.

Premiums will increase with age at the time of new mortgage applications, as well as requiring a new medical application.

Here’s a copy of RBC’s certificate for mortgage life insurance where you can confirm the above information:
https://www.rbcroyalbank.com/onlinebanking/mortgage_centre/homeprotector/HP%20Booklet%20EN.pdf