How much life insurance do I need?
Add up what would need paying if you died, subtract what is already there to pay it, and the difference is roughly the coverage to look at. That usually means debts, income your household would lose, costs still ahead such as childcare or education, and final expenses, less existing savings and any coverage already in place. Rules of thumb like ten times salary are a starting sanity check, not an answer. Debt counts only where someone else is on the hook for it, such as a jointly held mortgage or a co-signed loan, not a solo credit card the estate would settle. Group coverage through work belongs in the arithmetic, but it disappears with the job. In the worked example on this page, a couple in their late thirties with two young children and a joint mortgage ends up with a gap of $964,000 for the higher earner.
The figures in brief
- The gap produced by the worked example further down this page
- $964,000The gap produced by the worked example further down this pageA couple in their late thirties, two young children, a jointly held mortgage.
The same calculation for the lower earner
| Joint mortgage, which sits on both of them | $410,000 |
|---|---|
| Income replacement, roughly 60% of $55,000 for 14 years | $462,000 |
| Childcare and education contribution | $80,000 |
| Final and estate costs | $25,000 |
| Savings and investments | − $95,000 |
| Group coverage through work | None |
| Gap | $882,000 |
The same household as the worked example below, run for the partner earning $55,000. The savings and investments appear in both calculations because only one of the two events happens, not both. The result comes out smaller than the higher earner's, and nowhere near zero.
What to know at a glance
- Work from obligations, not from income. Two people earning the same amount can need very different coverage.
- Count debt that someone else is on the hook for, not all debt. A solo credit card dies with the estate; a co-signed mortgage does not.
- Existing group coverage counts toward the total, but only for as long as you hold that job.
- Coverage that is affordable and in place beats a perfect number you never buy.
On this page
How long do you need protection?
Start with the need you want your life insurance to cover.
Protection for a defined period. Check the policy’s renewal and conversion options.
Protection designed to last your lifetime, provided the policy stays in force.
Conceptual illustration, not a price comparison or a guarantee of benefits. Policy terms apply. Source: Financial Consumer Agency of Canada.
Why ten times salary is a weak answer
It is the number most often quoted, and it survives because it is easy to say. The problem is that income is a proxy for obligation, and the two come apart constantly.
A 34-year-old earning $70,000 with a $480,000 mortgage and two children under five has a very different problem from a 58-year-old earning $70,000 with a paid-off house and grown children. The multiple gives them the same answer. Working from what would actually need paying gives them answers that differ by several hundred thousand dollars, in the direction you would expect.
Use the multiple as a sanity check after you have done the arithmetic. If your calculated number lands wildly outside five to fifteen times income, it is worth re-examining an assumption.
The calculation
Four things go in the first column.
Debt that would land on someone else. The balance on a jointly held mortgage. Co-signed loans and lines of credit. Any borrowing secured against an asset the survivor needs to keep. Leave out debt that would simply be settled by the estate with nobody chasing a family member for the shortfall.
Income the household would lose. Take the share of your income that the household actually spends on living, then decide how many years it needs to continue. For a family with young children, that period usually runs until the youngest is independent. For a couple without children, it may be shorter, covering the years until a survivor’s own savings and pension carry them.
Costs still ahead. Childcare if a surviving parent would need to pay for what you were doing. Post-secondary education, if funding it matters to you. Ongoing support for a dependent adult, which can run far longer than any other item on this list.
Final and estate costs. Funeral and burial or cremation, which in Canada commonly runs into the thousands. Legal and probate work on the estate. Any tax the estate would owe, which is where a cottage or rental property can produce a surprisingly large number.
Then subtract what is already there: savings and investments that could be used, registered assets that pass to a spouse, existing personal coverage, and group coverage through work.
What is left is the gap.
A worked example
The figures below are illustrative only. They are a made-up household used to show how the arithmetic works, not a quote, a projection or a recommendation, and no part of them reflects any real person, policy or insurer.
A couple in their late thirties, two children aged four and seven. One earns $85,000, the other $55,000. Mortgage balance $410,000, held jointly. No other significant debt. Combined savings and investments of $95,000. The higher earner has group coverage of two times salary through work.
Looking at the higher earner:
| Item | Amount |
|---|---|
| Joint mortgage | $410,000 |
| Income replacement, roughly 60% of $85,000 for 14 years | $714,000 |
| Childcare and education contribution | $80,000 |
| Final and estate costs | $25,000 |
| Total need | $1,229,000 |
| Less savings and investments | ($95,000) |
| Less group coverage, 2 x $85,000 | ($170,000) |
| Gap | $964,000 |
So somewhere near a million dollars of personal coverage, which for a healthy person in their thirties is normally a manageable monthly cost. The group coverage is included here, but it disappears with the job, which is an argument against leaning on it too heavily.
Run the same exercise for the lower earner and the number comes out smaller, but it is very rarely zero, because the mortgage sits on both of them.
Where people undershoot
Insuring only the mortgage. Clearing the mortgage is the most visible problem and the easiest to picture, so it tends to become the whole plan. It leaves the household with a paid-off home and no income.
Insuring only the higher earner. Both incomes are usually spent, and losing either one creates a shortfall.
Counting group coverage as permanent. It is not, and the moment you most want it, after a health change that made you leave a job, is the moment it is least likely to still be there.
Choosing the amount by the premium. Understandable, and it produces coverage sized to a budget rather than to a need. Better to work out the number first, then decide how to fit it, which sometimes means a longer term, sometimes a mix of term lengths, and sometimes accepting less than ideal while circumstances improve.
Where people overshoot
Less common, but it happens. Buying a very large permanent policy in your thirties on the basis of estate planning that will not become relevant for forty years, when a term policy would cover the actual current problem for a fraction of the cost, is the usual version. So is coverage that continues at full size long after the children are independent and the mortgage is gone.
Getting to a number that is actually yours
The arithmetic above will get you close. What it cannot account for is a pension that pays a survivor benefit, a business interest with an existing buy-sell arrangement, a blended family with obligations in more than one household, or a dependent adult child. Those change the answer enough that they are worth working through with somebody who can see the whole picture.
What the answer depends on
Life insurance decisions are made case by case. These are the factors that usually move the outcome:
- Whether anyone relies on your income, and for how many more years
- Which debts are joint, co-signed or secured against a shared asset
- What savings, investments and existing coverage are already available
- Whether there are costs still ahead, such as childcare, education or care for a dependent adult
- Whether your estate would face a tax bill on assets like a second property
Related questions
- Who needs life insurance, and who probably does not
- Choosing a 10, 20 or 30 year term
- What life insurance costs and what drives the price
- Coverage through work versus your own policy
New to this? What life insurance is and how it works covers the ground this page assumes.
Sources
- Determining your insurance needs, Financial Consumer Agency of Canada.Supports: Insurance needs depend on personal circumstances and stage of life, including moving in with a partner, starting a family and buying a home.. Checked August 13, 2026.
- Life insurance, Financial Consumer Agency of Canada.Supports: The death benefit may be used to replace income, provide for children or dependants, pay funeral expenses and pay off debts.. Checked August 13, 2026.
Talk it through with a licensed advisor
Reading about how coverage works only gets you so far. What is actually available to you depends on your health, your age and which insurer is looking at your file.
A few questions about you and your health, then a licensed advisor comes back with the options you can actually apply for. No obligation, and a quote is an estimate rather than an offer of coverage.
Send the question you actually have. A licensed advisor replies within one business day. Nothing gets started until you say so.
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