Life insurance needs calculator
Uses the DIME framework — Debt + Income replacement + Mortgage + Education — to estimate how much life insurance coverage your family actually needs. Most Canadian families are under-insured; this gives you the specific gap to fill.
Breakdown
- Income replacement$850,000
- Mortgage payoff$320,000
- Other debts$15,000
- Children's education$160,000
- Final expenses$20,000
- Total needs$1,365,000
- Less existing coverage−$200,000
- Gap to fill$1,165,000
Uses the DIME framework (Debt + Income replacement + Mortgage + Education). Other approaches (Human Life Value, Capital Needs Analysis) may produce different numbers — DIME is the most common quick-estimate method for term insurance sizing.
Figures shown are approximate, calculated from current publicly-available statutes and standard formulas. Final amounts depend on your specific circumstances — assets in your name versus jointly held, beneficiary designations, debts, province-specific exemptions, and applicable tax credits. For numbers you can act on, a Canadian accountant or licenced estate planner can verify against your actual situation.
Frequently asked questions
How much life insurance do I really need?
Common rule-of-thumb is 7-15× annual income, but the DIME framework gives a more specific answer based on your actual debts, income-replacement needs, children's education costs, and existing coverage. Most working-age Canadians with children find their need is in the $500K-$2M range.
What's the DIME formula?
DIME stands for Debt + Income replacement + Mortgage + Education. Add up all your debts (including mortgage), multiply your annual income by the years you'd want to replace it (typically 7-15 years), add education costs for any children, then add final-expense estimates. Subtract existing coverage. The result is the gap to fill.
Term vs whole life insurance?
For pure protection (replacing income, covering mortgage, funding education), term insurance is almost always the better choice — far lower premiums for the same coverage. Whole life insurance has investment components and is sometimes recommended for estate-planning purposes (corporate-owned life insurance, charitable bequest funding), but for basic family-protection needs, term wins.
Should I include my spouse's income?
This calculator sizes coverage for ONE life — your own. If both spouses earn income and have similar protection needs, run the calculator twice (once for each) and acquire coverage on each life independently. Joint policies are less common in Canada than separate term policies.
How accurate is the education cost estimate?
Canadian 4-year university with residence currently runs roughly $80,000-$120,000 (tuition, residence, books, living expenses combined). Trade school or community college runs less. International or graduate education runs more. Adjust the per-child number based on your specific expectations.
What if I already have group life insurance from work?
Include the death benefit amount in 'existing coverage.' Caution: group coverage usually ends if you change jobs or get laid off — and may be limited (often 1-2× salary). Most planners recommend that personal life insurance, separate from group coverage, carries the bulk of family-protection needs.