There’s No One-Size-Fits-All Answer
The “right” amount of life insurance looks different for every Canadian family. It depends on income, responsibilities, lifestyle, and future plans — not just a calculator or rule of thumb.
Life insurance isn’t about maximizing coverage. It’s about making sure the people who depend on you are financially okay if something happens.
What Life Insurance Is Meant to Cover
At its core, life insurance is designed to replace or support:
- Lost income
- Outstanding debts
- Ongoing household expenses
- Childcare or education costs
- Final expenses
For many families, it’s less about creating wealth and more about preventing financial disruption during an already difficult time.
Income Replacement: A Starting Point
A common place to start is income replacement. Ask:
- How many years would my family need financial support?
- Would one income disappear completely?
- Would a surviving partner need time to retrain or adjust?
Many families consider covering 10–20 years of after-tax income, but this is only a guideline — not a rule.
Debts and Fixed Obligations
Next, consider debts that wouldn’t disappear if you did:
- Mortgage or rent
- Car loans or leases
- Lines of credit
- Credit cards
- Business or personal guarantees
Some families want enough insurance to eliminate major debts; others prefer partial coverage to reduce pressure. Both approaches can be reasonable.
Children and Dependents
If you have children or dependents, think about:
- Childcare or caregiving costs
- Education savings goals
- Everyday living expenses
- Special needs or long-term care considerations
Life insurance can help ensure dependents maintain stability — even if plans change later.
Existing Coverage You Already Have
Before assuming you need more insurance, take stock of what’s already in place:
- Employer group life insurance
- Spousal coverage
- Existing personal policies
- Government survivor benefits
Group coverage can help, but it’s often limited and tied to employment — which may not be permanent.
What Many Canadian Families Choose
In practice, many Canadian families end up with:
- Term life insurance
- Coverage that lasts through working years
- Amounts that focus on income and family protection
- Flexibility to adjust as life changes
This approach keeps costs manageable while covering the most important years.
Why More Insurance Isn’t Always Better
More coverage doesn’t always equal better protection. Over-insuring can:
- Add unnecessary cost
- Create pressure to keep policies you may not need later
- Distract from other financial priorities
The goal is appropriate coverage, not maximum coverage.
When It Makes Sense to Revisit the Question
Life insurance needs change over time. It’s worth revisiting coverage after:
- Marriage or separation
- Having children
- Buying a home
- Career or income changes
- Paying off major debts
Adjusting coverage is normal — and often smart.
A Calm Way to Think About It
Instead of asking, “How much insurance can I get?”
Try asking, “What would my family realistically need to stay stable?”
That mindset usually leads to clearer, more comfortable decisions.