How much life insurance do I need? A simple needs calculator
Add up what your family would need, subtract what they already have. The difference is the amount to insure.
Round numbers like $500,000 or "10 times salary" are easy to say and often wrong. A needs analysis takes five minutes and gives a number based on your mortgage, your income, your children and your savings. Here is the calculator, the formula behind it and how to read the result.
In short
Add your mortgage and debts, the income your family would need for a set number of years, education and final expenses, then subtract savings and existing life insurance. For example, a $500,000 mortgage, $80,000 income for 10 years, $130,000 of other debts and education goals, $25,000 of final costs, and $350,000 already in place leaves a gap of about $1,105,000. Cover the part that ends with term and any lifelong part with permanent insurance.
Life insurance needs calculator
Change any figure. The result splits the need into the part that ends (suits term) and the part that lasts (suits permanent cover).
Educational only. It does not allow for investment returns, inflation, taxes, survivor income, CPP benefits, employer pensions or every estate factor. A detailed needs analysis can refine the result.
Want to test savings, retirement or education numbers too? Try the financial calculator.
The needs-based formula
Mortgage + debts + income replacement + education and childcare + final expenses + other obligations − liquid assets − existing insurance = approximate insurance gap.
The Financial Consumer Agency of Canada lists what a death benefit is commonly used for: replacing income, providing for dependants, paying funeral costs and paying off debts. The formula just puts a dollar figure on each one.
Here is how the calculator's starting figures add up:
| Mortgage | $500,000 |
| Other debts | $30,000 |
| Income: $80,000 × 10 years | $800,000 |
| Education and childcare | $100,000 |
| Final and estate expenses | $25,000 |
| Total need | $1,455,000 |
| Less savings and existing insurance | −$350,000 |
| Coverage gap | $1,105,000 |
Avoid the "10 times income" shortcut
An income multiple is a quick start, but it can badly overstate or understate the real need. For the same $80,000 earner, 10 times income gives $800,000. The needs formula above gives $1,105,000 because of the mortgage and education goal. Someone renting with grown children might need much less than either.
How many years of income should you replace?
There is no single number. Pick the date your family would no longer need your pay.
Until the youngest is independent
For example, a 3-year-old means about 20 years if you count to age 23 or so.
Until your partner retires
If your partner would need your income to reach retirement, count the years to that date.
Until a major debt is gone
If the income is mostly for the mortgage, match it to the years left on the mortgage.
A family with young children usually needs a longer income period than a couple close to retirement. Use take-home pay, not gross, since the death benefit is generally not taxed as income.
Should a stay-at-home spouse have life insurance?
Often yes. Without a paycheque there is still work that would have to be paid for: childcare, driving to school, meals, running the home. The calculation should use the real cost of the services your family would need to replace.
Run the calculator separately for each partner. The working partner's need is usually driven by income; the at-home partner's need is usually driven by childcare until the children are older. See life insurance for couples.
What counts as "available resources"
Savings and TFSAs usually count in full if your family could use them.
RRSPs count after tax, and only if they are not meant for your partner's retirement.
Workplace cover counts only if you expect to keep that job. Group cover often ends when employment does.
Government benefits are small: the CPP death benefit is a one-time payment of up to $5,000. A surviving partner may also qualify for a CPP survivor's pension.
After the amount, choose how long
Split the need into what is temporary and what lasts for life.
| Part of the need | Usually lasts | Often covered with |
|---|---|---|
| Mortgage and debts | Until paid off | Term life matched to the mortgage |
| Income and children | Until children are independent or partner retires | Term 20, 30 or 40; see Term 20 vs Term 30 and Term 30 vs Term 40 |
| Final expenses and estate | For life | Whole life or Term 100; see term vs whole life |
Once you have the number, sample costs for common amounts are on the $500,000 life insurance cost and $1 million life insurance pages.
How much life insurance do I need? Questions
How much life insurance do I need in Canada?
Add your debts, the income your family would need for a set number of years, education and final costs, then subtract savings and existing insurance.
With the calculator's starting figures (a $500,000 mortgage, $80,000 income for 10 years, $150,000 in savings and $200,000 of existing cover) the gap is $1,105,000.
Is 10 times my income enough?
It can be a starting point, but it is not a final answer, because it ignores your debts, savings, dependants and how long the need lasts.
A single person with no mortgage may need far less, and a parent of young children with a large mortgage may need more.
Should I include the full mortgage balance?
Include the amount you want the insurance to deal with.
Some families want the mortgage fully paid off; others plan for the surviving partner to keep making part of the payments.
Should RRSPs and TFSAs reduce the amount I need?
Possibly, if that money would really be available to your family.
RRSPs are taxed when withdrawn and may be meant for a partner's retirement, so count them carefully, after tax.
Should my workplace life insurance count?
It can, if you expect to keep it, but group cover usually ends or changes when you leave the job.
Many people count only part of it, or none, if they might change employers.
Does a stay-at-home parent need life insurance?
Often yes. Childcare, driving, meals and running the home all cost money to replace.
Put a realistic yearly cost for those services in the income field and run the calculator for that parent.
Do government benefits reduce what I need?
A little. The CPP death benefit is a one-time payment of up to $5,000, and a surviving partner may qualify for a CPP survivor's pension.
These help, but rarely replace a working income, so most families treat them as a small cushion.
How often should I review my coverage?
Whenever life changes: a new home, a new child, a big raise, a separation or a business loan.
The FCAC suggests reviewing your insurance needs over time, because they rise and fall.
Written by Pankaj Bhatia, CHS, PFA
Insure In Canada Inc. · Licensed in Ontario, Alberta, British Columbia, Manitoba, Saskatchewan, New Brunswick and Nova Scotia
Pankaj runs a needs analysis with each family before quoting, then matches each part of the number to the right term length or permanent plan.
Call 647-640-2222 · WhatsApp · info@pankajbhatia.ca · About Pankaj
Offices: 205-5250 Solar Drive, Mississauga, ON L4W 0G4 · 206-460 Hespeler Rd, Cambridge, ON N1R 0E3
Sources and related pages
Educational estimate as of October 30, 2026, not financial, tax or legal advice. Government benefit amounts can change; check canada.ca for current figures.