Most people either have no life insurance or have an amount someone picked as a round number. The right amount depends on what your family would need if your income stopped tomorrow.
Start with what your family would need to pay
- Debts: your mortgage, car loans, lines of credit, and credit cards
- Income replacement: the number of years your family would need your income, often until the youngest child is independent
- Future goals: your children’s education, or support for aging parents
- Final expenses: funeral costs and any taxes owing at death
Then subtract what is already there
- Savings and investments your family could use
- Group life insurance through work, which usually ends if you leave your job
- Government survivor benefits, such as the CPP death and survivor benefits
The gap between the two is roughly how much coverage you need.
A quick example
A couple has a $500,000 mortgage, two young children, and one partner earning $80,000 a year. To pay off the mortgage and replace about 70% of that income for 15 years, they would need well over $1 million before subtracting savings and workplace coverage. Many families are surprised by how large the number is, and by how affordable term insurance can be for it.
Term or permanent?
Needs that end, like a mortgage or raising children, are usually best covered with term insurance. Needs that last for life, like final taxes or leaving an inheritance, may call for permanent insurance. Many families use a combination.
Common mistakes
- Relying only on group coverage from work
- Insuring only the main earner and forgetting the value of a stay-at-home parent
- Never reviewing coverage after a new home, child, or business
Want help applying this to your situation? Book a free, no-obligation consultation with one of our advisors, in English or Farsi.
This article is for general educational purposes only and is not personalized financial, tax, or legal advice. Figures are current as of 2026 and may change.
