Don't buy the bank's Mortgage Insurance in Canada
With term life:
• The beneficiary is whom you choose (e.g. spouse), instead of the lending institution
• You own the policy, and not the lending institution
•Premiums are not taxable
Here is an example scenario:
Mr. and Mrs. Smith have purchased mortgage insurance protection from their bank when they bought a home. Unfortunately, a few years later Mr. Smith passes away. The bank immediately forces Mrs. Smith to pay off the entire mortgage with the proceeds of the policy, even though Mrs. Smith has other pressing needs for those funds (there are several tuition fees from her children to pay for, and renovations need to be done).
If they had purchased term life insurance then Mrs. Smith would be the beneficiary, and would receive the benefits. It would then be at her discretion whether or not to pay off the entire mortgage, or pay part of it and use the other proceeds elsewhere.
It would be especially advantageous not to pay off the entire mortgage if they had obtained it at a good interest rate.