Family · 2026 rules

Life insurance need

The DIME method adds up what actually has to be paid if your income stops: debt, income replacement, the mortgage, and education. Then it subtracts what you already have, which is the only number an insurer's rule of thumb never asks about.

DIME coverage total
Existing coverage gap
Term length guidance

Your numberslive

Income replacement

Annual income to replace

Years of replacementLong enough for the youngest child to finish school is the usual benchmark.15 yr

5 yr10 yr15 yr20 yr30 yr

Debt and mortgage

Mortgage balance

Other debtCar loans, lines of credit, credit cards, student loans.

Funeral and final expenses

Children

Children to educate

kids

Age of the youngest

years

What you already have

Existing life insuranceInclude group coverage through work, which usually ends when the job does.

Liquid savings and investmentsExclude registered retirement money you would not want spent.

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Additional coverage you need

$1,710,000

$1,920,000 of need against $210,000 already in place

About 19.9× your income — a 20-year term policy is the usual shape.

Total DIME need

$1,920,000

Already covered

$210,000

Insurance plus liquid assets

Suggested term

20 years

Covers the youngest child to age 22 (16 yr)

What makes up the need

Coverage need by component

67%

21%

Income replacement$1,290,000
Mortgage$410,000
Education$176,000
Debt and final expenses$44,000

D — Debt and final expensesCleared immediately so the estate is not settling loans	$44,000
I — Income replacement$86,000 a year for 15 yr	$1,290,000
M — MortgagePaying it off is usually cheaper than insuring the payment	$410,000
E — Education2 × $22,000 a year for 4 years	$176,000
Total need	$1,920,000
Less existing insurance	($150,000)
Less liquid savings	($60,000)
Coverage to buy	$1,710,000

How the need falls over time

Remaining DIME need at five-year intervals, as the mortgage amortises and the children age out

Income replacement
Mortgage
Education
Debt

Term versus permanent

20-year termLevel cost for the term, then it ends or renews far more expensively	Lowest premium
Renewable termConvenient at renewal, but the step-up at the end of the term is large	Rises steeply
Whole life or universalMakes sense for estate and tax planning, rarely for pure income protection	5–15× the premium
Group coverage at workCheap, but it usually ends with the job and is rarely enough on its own	100.0%–200.0% of salary

Check whether your group coverage is portableEmployer life insurance is counted above at face value, but most policies terminate when employment does. If a material share of the $150,000 is group coverage, treat the individually owned portion as your real floor.

A death benefit is not taxable — but the estate still needs cashLife insurance proceeds are received tax-free in Canada. Registered accounts, however, are generally deemed disposed at death, and capital gains on a second property come due then too, which is a need the DIME method does not capture.

How this is calculated

DIME is a needs-based total: debt and final expenses, income replacement over your chosen horizon, the outstanding mortgage, and education for each child at $22,000 a year for 4 years — roughly a Canadian undergraduate degree living away from home.

Income replacement is not discounted for investment returns or inflation, which are close to offsetting over a fifteen-year horizon and pull in opposite directions. The projection of falling need assumes a straight-line mortgage payoff over twenty-five years and that education need disappears once the youngest turns 22.

Survivor benefits — the CPP survivor’s pension, the CPP death benefit, employer pension survivor options — are not netted off, because they vary too much by contribution history to estimate responsibly. Including them would reduce the gap.

These results are illustrative estimates based on published 2026 rates and typical lender rules. They are not financial, tax, or legal advice, and they are not a mortgage or credit approval. See the methodology and disclaimer.

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