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Life Insurance Calculator

Work out how much life insurance you need: enough to replace your income for the years your family would need it, pay off the mortgage and other debts, and cover education and final costs, less the savings and cover you already have.

$

A year: your take-home pay

years

Until your youngest is grown up

$
$

Car loans, cards, student loans

$

That your family could use

$

Group cover through work, or your own policy

More options· $10,000 final costs
$

In total, to set aside

$
%

A year, above inflation

Life cover you need

$1,050,000

Your family would need $1,025,000; you already have $20,000 in savings and cover.

Income for 10 years
$600,000
Mortgage and debts
$415,000
You already have
$20,000

What this means

Term life insurance for 10 years is usually the cheapest way to get this cover: it pays out if you die during the term, and costs less the younger and healthier you are when you buy it. Choose a term that lasts until your children are grown up or your mortgage is paid off.

If no one depends on your income, you may need little or no life cover. Cover for your income if you’re too ill to work is often more important, and more likely to be needed.

Next step

How it adds up

Income for 10 years$600,000
Mortgage and other debts$415,000
Funeral and final costs$10,000
Your family would need$1,025,000
Less savings and investments-$20,000
Less cover you already have$0
Extra cover needed$1,005,000

What the cover pays for

Your family’s needs
  • Income for 10 years$600,000
  • Mortgage and debts$415,000
  • Final costs$10,000
Assumptions in this estimate
  • Each year’s income is simply set aside, with any interest on it just keeping up with inflation.
  • The amount is rounded up to a round figure, as policies are sold. It’s a starting point: a broker or adviser can look at your whole situation.
  • The CPP may pay a survivor’s pension, children’s benefits and a one-time death benefit, which would lower what you need.
  • Life insurance paid to a named beneficiary is tax-free in Canada.
  • Group cover through work usually ends when you leave the job, so it’s worth having some of your own.
Spotted a mistake? Tell us

How the calculator works

  1. Income to replace: what your family would need each year, usually your take-home pay, for the number of years you choose, such as until your youngest finishes school.
  2. Debts: your mortgage and other debts, so your family could pay them off.
  3. Other costs: children’s education and funeral costs, under More options.
  4. Less what you have: savings and investments your family could use, and life cover you already have through work or your own policy.

The result is rounded up to a round amount, as policies are sold.

Example

To replace $60,000 a year for 10 years, clear a $400,000 mortgage and $15,000 of other debts, and cover $10,000 of final costs, your family would need $1,025,000. With $20,000 of savings, that’s $1,005,000 of cover, so about $1,050,000.

Don’t forget

  • The CPP may pay your spouse a survivor’s pension, your children a monthly benefit, and a one-time death benefit, which lowers what you need.
  • Disability insurance: you’re more likely to be unable to work for a while than to die young. Check what your group plan at work covers.
  • A stay-at-home parent needs cover too: replacing childcare and running the home costs money.

Learn more

See our insurance basics guide, the budget calculator to fit the premium in, and the net worth calculator to add up what you’d leave.

Last updated

Frequently asked questions

How much life insurance do I need?

Enough to replace your income for as long as your family would rely on it, clear your mortgage and debts, and pay for anything else you want covered, like education, less your savings and any cover you already have. A common shortcut is 10 to 12 times your income, but working it out from your own needs is more accurate.

Term or permanent life insurance?

For most families, term life: it covers you for a set number of years, such as 10, 20 or 30, and costs much less than permanent (whole or universal) life for the same cover. Permanent life lasts your lifetime, but costs several times as much.

Is the group life insurance through work enough?

Often not. Group cover is commonly one or two times your salary, and it usually ends when you leave the job. Many people add a term policy of their own.

Are life insurance payouts taxed in Canada?

No. A death benefit paid to a named beneficiary is tax-free. Naming a beneficiary also keeps it out of your estate, so it isn’t delayed by probate.

Should I get mortgage life insurance from my bank?

Compare it first. Bank mortgage insurance pays the bank, and the cover falls as you pay down the mortgage while the premium usually doesn’t. A term policy of your own pays your family, who can choose how to use it.