Life Insurance Needs Calculator Canada 2026

Frequently asked questions

How much life insurance does the average Canadian need?

There is no single answer, as it depends on your income, debts, dependents, and existing coverage. However, a common guideline is 10 to 15 times your annual gross income. For a family with a $100,000 household income, a $500,000 mortgage, and two children, the total need often falls between $1 million and $2 million. The DIME method used by this calculator provides a more precise estimate tailored to your specific situation.

What is the DIME method for life insurance?

DIME stands for Debt, Income, Mortgage, and Education: the four major financial obligations your life insurance should cover. You add up all outstanding debts (excluding the mortgage), multiply your income by the number of years your family would need support, add your remaining mortgage balance, and include estimated education costs for each child, often $80,000 to $120,000 per child for a four-year Canadian university program. The total gives you a coverage target that accounts for your family's major financial needs.

Should I count my employer's group life insurance in my coverage?

Yes, but with caution. Employer group coverage (typically 1 to 2 times your annual salary) should be included when calculating your existing coverage. However, this benefit disappears if you leave your job, are laid off, or your employer changes providers. Most financial advisors recommend treating group coverage as a bonus rather than the foundation of your insurance plan, and securing enough personal coverage to protect your family independently of your employment.

Does my life insurance need decrease over time?

Generally, yes. As you pay down your mortgage, your children grow up and become financially independent, and your retirement savings grow, your total insurance need declines. This is why term insurance aligned with your highest-need years is often the most cost-effective approach. Reviewing your coverage every 3 to 5 years or after major life events (such as buying a home, having a child, or taking on significant debt) helps ensure you're not over- or under-insured.

Is mortgage life insurance from my bank a good alternative?

Mortgage life insurance offered by banks has several disadvantages compared to individual term insurance. The premium is often higher for equivalent coverage, the benefit amount decreases as your mortgage balance shrinks (while your premium stays the same), the payout goes directly to the lender rather than your family, and coverage ends if you switch lenders. An individual term life policy gives your beneficiaries the flexibility to use the death benefit as they see fit, whether that's paying off the mortgage, covering living expenses, or funding education.

How does this calculator work?

Enter your annual income, outstanding debts, mortgage balance, number of dependents, and estimated education costs per child. The calculator applies the DIME framework. It sums your debt obligations, calculates income replacement using a multiplier you choose (typically 10 to 15 times your annual income), adds your remaining mortgage balance, and includes projected education funding for each dependent child. It then subtracts your existing coverage (employer group benefits, personal policies, and liquid assets earmarked for your family) to determine your coverage gap. A positive gap means you need additional insurance.