How much life insurance would your family need?
A policy is a set of instructions for money you will not be there to manage. The question here is not what coverage costs, but how large it has to be before the plans you made together survive without your income behind them.
The calculation follows the DIME method — debt, income, mortgage, education — and then does the part people tend to skip: subtracting the coverage, the savings and the CPP death benefit already in place, so what is left on screen is the real gap.
Life Insurance Needs Calculator
This uses the DIME method — Debt, Income, Mortgage, Education — then subtracts what you already have. Leave anything that does not apply at zero.
A planning estimate, not advice. The DIME method deliberately ignores investment growth and inflation, which roughly cancel each other out over typical time horizons.
What Each Line Is Actually Paying For
Every line in the total buys a specific outcome. The mortgage line buys the choice to stay in the house rather than list it during the worst month of a family's life. The income line buys time: a stretch of months or years in which nobody has to take the first job going or move in with relatives to make the budget close.
The debt line clears balances that would otherwise be settled out of an estate before anyone inherits anything. The education line keeps a commitment made to a child who cannot yet fund it. Described that way, the total stops reading like an insurance quantity and starts reading like a list of promises with prices attached to them.
Years of Income Is the Choice That Moves Everything
The years of income replaced does more to the final figure than any other input. Five years is runway: room to grieve, retrain, refinance or sell without a fire sale. Twenty years is nearer full replacement, carrying a household through to the point where the youngest child is independent and a surviving partner is close to their own retirement.
A practical way to choose is to count forward twice. How old is your youngest child, and how many years until they support themselves? How many years remain on the mortgage amortization? Take the longer of the two and you have an answer you can defend, instead of a round number that felt reasonable.
Education Allowances and the Family Home
The education allowance per child is a judgement call, and it gets easier once you decide what you are funding: tuition on its own, tuition with residence, or a share of the whole cost. Whatever you settle on, express it as one child's amount, because the calculation multiplies it by the number of children you enter.
If an RESP is already growing, count what you reasonably expect it to hold by the time the first tuition bill lands rather than today's balance — and remember that contributions stop when the income does. The mortgage line deserves the same candour. If the intention is for your family to stay put, the balance belongs in the total in full.
Frequently asked questions
How much life insurance do I need with two kids and a mortgage?
Add the mortgage balance, your other debts, the income you would want replaced for the years until your youngest is independent, an education allowance for each child, and final expenses. Then subtract existing coverage and the savings a survivor could genuinely use. In a household with young children and a recent mortgage, those first two lines normally dominate the total.
Should the education allowance include money already in an RESP?
Set the allowance to the full amount you want each child to have, then account for the RESP on the savings line rather than in both places. Use a sensible projection of what the plan will hold when it is spent, and bear in mind that future contributions depend on the income you are insuring.
Is it better to buy enough coverage to pay off the mortgage outright?
Clearing it is the simplest arrangement and it removes the largest fixed payment from a survivor's monthly budget. The alternative is covering enough to keep payments current for several years, which needs less coverage but leaves the debt standing. The calculation uses the full balance, so reducing the mortgage line shows you what the lighter approach would take.
Who should receive the money if my children are minors?
Naming a minor directly generally means the proceeds are administered under provincial rules by a guardian or trustee, which is not always what a parent had in mind. Many parents name a spouse or partner as primary beneficiary and set out their wishes for the children through a will or a trust. Ask a lawyer or advisor how this works in your province before you complete a beneficiary form.
What if the result says I need no additional coverage?
It means the policies, accessible savings and CPP death benefit you entered already add up to the obligations you listed. Check the assumptions before accepting it: workplace coverage that ends at retirement, savings already promised to something else, or a short income replacement period can each produce a zero that will not hold for long.
Other free tools
See the full set on the tools index.