Life Insurance Needs Calculator
The DIME method adds up Debt, Income, Mortgage and Education, with present-value income replacement, then subtracts the coverage and savings you already have and estimates a 2026 Canadian term premium on the gap.
From your family's need to the policy to buy
Each need adds to the total. What you already have takes it back down, and the gap that is left rounds up to the next $50,000, the policy size insurers sell.
Policy size by income replaced and years of support
Each cell is the policy to buy if your family needed that share of your income for that many years, with everything else at your numbers.
What your coverage is for
The four DIME components plus final expenses that make up your total need.
Illustrative 20-year term premiums
Typical 2026 Canadian monthly rates per $500,000 of healthy, standard-issue coverage. The highlighted row is closest to your profile.
| Profile | Per $500k /mo | Your coverage /mo | Per year |
|---|
Needs breakdown
Every line that goes into your total, and the offsets that reduce it.
| Component | Amount | Notes |
|---|
How this is calculated
The DIME method
Total need = Debt + Income replacement + Mortgage + Education + final expenses. Subtract existing life insurance, liquid savings, and the one-time CPP death benefit to get the gap you should insure. The hero figure rounds that gap up to the nearest $50,000 (policies are sold in round bands) and shows the exact number below it.
The bridge chart
The bridge adds each need (income replacement, debts, mortgage, education, final expenses) to reach your total need, then takes off existing coverage, liquid savings and the CPP death benefit to land on the coverage gap. The last step rounds the gap up to the next $50,000, the policy in the headline. Every bar up to the coverage gap matches a line of the needs breakdown table, and lines that are $0 are left out. If what you already have is more than the need, the bridge ends below zero by the amount to spare.
Policy size grid
The replacement percentage and the years of support are the two inputs most people have to guess, and income replacement is usually the largest part of the need. The grid re-runs the full calculation for 50% to 100% of your income in 10-point steps and for 10, 15, 20 and 25 years of support. Your own percentage gets its own row when it is not one of these, and your own years take the place of the column farthest from them, so the grid stays four columns wide. It holds every other input at your numbers and rounds each result up to the next $50,000 like the headline, so your outlined cell always equals it. With present value on, every cell is discounted at the same real 2%. The grid is hidden when income is $0, because every cell would then be the same.
Income replacement, present value
A lump sum invested today can be drawn down over many years, so replacing $52,500/yr for 20 years does not require 20 × $52,500. With "present value" on, we discount the stream at a real 2% return (a conservative after-inflation rate the payout is assumed to earn) using the ordinary-annuity formula PV = A × (1 − (1 + r)−n) ÷ r. For A = $52,500, r = 2%, n = 20 that is A × 16.35 ≈ $858,450, about 18% less than the raw $1,050,000. The formula assumes each year's income is drawn at the end of the year; drawing it monthly from the start would need roughly 1% more, which the $50,000 rounding usually absorbs. Turn the toggle off to use a simple income × replacement % × years figure instead.
Income multiple cross-check
The quick rule of thumb is 7–10× annual income. We show 10× so you can sanity-check the DIME result. DIME is usually more accurate because it reflects your debts and your kids' ages; the multiple ignores both.
Premium estimate (illustrative only)
The table shows typical 2026 Canadian rates for a healthy applicant buying 20-year term, per $500,000 of coverage, scaled linearly to the policy in the headline (your gap rounded up to the next $50,000). Your premium depends on health, driving record, occupation, family history, and the insurer. Get a quote. A 35-year-old non-smoking male runs roughly $35/mo per $500k; smokers pay about 3×, and rates rise ~8%/yr with age.
Term vs. whole life: buy term, invest the difference
Term life is cheap because it only covers the years you have a mortgage and dependents. The classic Canadian playbook is to buy enough term to close this gap and invest the premium savings in a TFSA/RRSP or FHSA. Whole and universal life cost far more and only make sense for narrow permanent needs: a lifetime tax bill on a business or cottage, estate equalization, or a special-needs dependent who will always require support.
Employer, spousal & stay-at-home coverage
Employer group life is usually only 1–2× salary, is not portable, and ends when you leave. Treat it as a supplement, not your plan. Both partners should be insured, including a stay-at-home parent whose childcare and household work would cost $40k–$70k/yr to replace. This tool sizes one person at a time; run it once for each earner and caregiver.
What this doesn't model
CPP survivor's pension (varies by contribution history), a surviving spouse's ongoing income, group coverage that continues in retirement, or Quebec-specific products. It also ignores existing RESP balances against the education line, and RRSPs against liquid savings (they are taxable on death). Pair it with the RESP calculator and emergency fund calculator.
Common questions
How much life insurance do I need?
The DIME method adds up your Debts (non-mortgage), Income to replace (annual income times a replacement percentage over the years your family needs support), Mortgage balance, and Education costs for your children, then subtracts any coverage and liquid savings you already have. A common rule-of-thumb cross-check is 7 to 10 times your annual income, but DIME is more precise because it reflects your obligations.
What is the DIME method for life insurance?
DIME stands for Debt, Income, Mortgage, and Education. You total these four needs plus final expenses, then subtract existing life insurance and liquid assets. The remainder is the coverage gap you should insure. Each piece maps to an obligation your family would still face.
Should I buy term or whole life insurance in Canada?
For most Canadian families, term life covers the years you have dependents and a mortgage at a fraction of the cost of whole life. The classic advice is to buy term and invest the difference in an RRSP, TFSA, or FHSA. Whole and universal life have narrow uses: permanent estate needs, funding a lifetime tax liability on a business or cottage, or insuring a special-needs dependent who will always need support.
Is my employer group life insurance enough?
Usually not. Employer group coverage is typically only one to two times your salary, is not portable if you change jobs, and often ends when you leave or retire. It is a useful supplement but should not be your family's only protection.
Should a stay-at-home parent have life insurance?
Yes. A stay-at-home parent provides childcare, meals, transportation, and household management, often $40,000 to $70,000 a year to replace. Insure the cost of hiring that help until the youngest child is independent. Enter it as an income-replacement figure using the replacement slider.