Your Mortgage, Your Kids, Your Income: Sizing Life Insurance to Your Own Debts
Picture an Edmonton household with a $600,000 mortgage, two kids under ten, and one paycheque doing most of the heavy lifting. The common advice says to buy life insurance worth 7 to 10 times your gross income. On a $90,000 salary, that works out to $630,000 to $900,000, which sounds generous until you start adding up what that family would actually owe.
The useful way to size life insurance is to list your own obligations, put a dollar figure and an end date beside each one, and buy coverage that matches the list. A formula gives you a place to start. Your mortgage, your kids' ages and the work each partner does around the house tell you the real number. Getting it wrong shows up later, at a moment when your family has no room to fix it.
Start with the debts that have end dates
The mortgage is usually the largest single item, and it's the easiest to measure. Bank of Canada data puts median household mortgage payments at 41.3% of disposable income, so losing one income can make the home unaffordable within months.
Lenders will offer to insure that balance at signing. Most of that coverage is decreasing term, meaning the payout shrinks as you pay the mortgage down, and it pays the lender rather than your family. If you move to a different lender at renewal for a better rate, that coverage often ends, and you'd be applying again older and possibly less healthy. A personal term policy keeps a level payout, names your family as the beneficiary, and stays with you whichever lender holds the mortgage.
Price the years along with the balance
Paying off the house solves one problem. Your family still has to eat, drive, pay for daycare and save for school. That's income replacement, and it runs for as many years as someone depends on you.
Here's illustrative arithmetic for the household above. Say the surviving partner would face a $50,000 yearly shortfall until the youngest child is about 20, roughly 15 years away. That's $750,000. Add the $600,000 mortgage and funeral costs, which run between $8,000 and $15,000 in Alberta, and the need passes $1.3 million. The 7 to 10 times rule left a gap of several hundred thousand dollars.
The same math applies to a parent who stays home. Childcare, driving, meals and running the household all cost real money to replace, and that partner is often the person nobody insured.
Check where your existing coverage lives
Many people with workplace coverage count it as their plan. A typical group policy pays about two times salary, which rarely covers an Edmonton mortgage plus living costs, and it usually ends when you leave the job. Self-employed Albertans and contractors have no group plan at all, so an individual policy is their only protection. A MoneySense report found that in 2026, 24% of Canadians who have life insurance aren't confident their coverage is enough. A short list of debts and end dates usually tells you which side of that line you're on.
Match each policy to the debt it covers
Once each obligation has an end date, you can buy coverage in pieces. Term insurance runs for a set period, commonly 10, 20 or 30 years, and costs far less than permanent coverage. Estimates for a healthy 35-year-old non-smoker start around $25 to $35 a month for $500,000.
That makes layering practical. You might hold a 20-year policy for the years the kids depend on you and a 25 or 30-year policy sized to the mortgage. An investor with rental properties can line up a separate term with each property's amortization, which is the number of years it will take to pay that mortgage off completely, so coverage steps down as the debts do. Payouts generally reach beneficiaries tax-free, so the face amount is what your family has to work with.
Timing matters too. Premiums rise with age, and a health change in your 40s can make coverage expensive or hard to get.
Write down every debt and every person who relies on you, with the year each one ends. If your current coverage doesn't line up with that list, the list is the better guide to what to buy.
Picture an Edmonton household with a $600,000 mortgage, two kids under ten, and one paycheque doing most of the heavy lifting. The common advice says to buy life insurance worth 7 to 10 times your gross income. On a $90,000 salary, that works out to $630,000 to $900,000, which sounds generous until you start adding up what that family would actually owe.
The useful way to size life insurance is to list your own obligations, put a dollar figure and an end date beside each one, and buy coverage that matches the list. A formula gives you a place to start. Your mortgage, your kids' ages and the work each partner does around the house tell you the real number. Getting it wrong shows up later, at a moment when your family has no room to fix it.
Start with the debts that have end dates
The mortgage is usually the largest single item, and it's the easiest to measure. Bank of Canada data puts median household mortgage payments at 41.3% of disposable income, so losing one income can make the home unaffordable within months.
Lenders will offer to insure that balance at signing. Most of that coverage is decreasing term, meaning the payout shrinks as you pay the mortgage down, and it pays the lender rather than your family. If you move to a different lender at renewal for a better rate, that coverage often ends, and you'd be applying again older and possibly less healthy. A personal term policy keeps a level payout, names your family as the beneficiary, and stays with you whichever lender holds the mortgage.
Price the years along with the balance
Paying off the house solves one problem. Your family still has to eat, drive, pay for daycare and save for school. That's income replacement, and it runs for as many years as someone depends on you.
Here's illustrative arithmetic for the household above. Say the surviving partner would face a $50,000 yearly shortfall until the youngest child is about 20, roughly 15 years away. That's $750,000. Add the $600,000 mortgage and funeral costs, which run between $8,000 and $15,000 in Alberta, and the need passes $1.3 million. The 7 to 10 times rule left a gap of several hundred thousand dollars.
The same math applies to a parent who stays home. Childcare, driving, meals and running the household all cost real money to replace, and that partner is often the person nobody insured.
Check where your existing coverage lives
Many people with workplace coverage count it as their plan. A typical group policy pays about two times salary, which rarely covers an Edmonton mortgage plus living costs, and it usually ends when you leave the job. Self-employed Albertans and contractors have no group plan at all, so an individual policy is their only protection. A MoneySense report found that in 2026, 24% of Canadians who have life insurance aren't confident their coverage is enough. A short list of debts and end dates usually tells you which side of that line you're on.
Match each policy to the debt it covers
Once each obligation has an end date, you can buy coverage in pieces. Term insurance runs for a set period, commonly 10, 20 or 30 years, and costs far less than permanent coverage. Estimates for a healthy 35-year-old non-smoker start around $25 to $35 a month for $500,000.
That makes layering practical. You might hold a 20-year policy for the years the kids depend on you and a 25 or 30-year policy sized to the mortgage. An investor with rental properties can line up a separate term with each property's amortization, which is the number of years it will take to pay that mortgage off completely, so coverage steps down as the debts do. Payouts generally reach beneficiaries tax-free, so the face amount is what your family has to work with.
Timing matters too. Premiums rise with age, and a health change in your 40s can make coverage expensive or hard to get.
Write down every debt and every person who relies on you, with the year each one ends. If your current coverage doesn't line up with that list, the list is the better guide to what to buy.
Read Next
Five Money Checks Canadian Snowbirds Should Finish Before Heading South
Canadian Bank Security Assumes a Human Is Logging In. AI Agents Break That
Before Storm Winds Arrive, Turn 5 Yard Hazards Into Protective Buffers
A 25 Basis Point Hike Doesn't Erase Variable's Long-Run Edge Over Fixed