Life insurance isn’t a one-size-fits-all solution. For Canadians, the question isn't just "Do I need life insurance?" but rather “Would life insurance protect the people and goals that matter most to me?”

Let’s dive into this and look at the different types of life insurance and coverage options, as well as who should consider life insurance.

Who Needs Life Insurance?

You might not need life insurance if no one relies on your income or if you have enough assets to cover your debts and final expenses. But for many, life insurance provides critical protection. A 2024 study showed that 57 percent of Canadian adults say they have life insurance coverage.¹

Here are the key groups who should consider it:

Parents with young children
If you have young kids, life insurance can help replace your income to maintain your family’s lifestyle in case something happens to you. It can also fund future education costs and cover the rising costs of childcare and other daily expenses, ensuring that your children’s well-being is protected even if you're no longer around.

Homeowners with a mortgage
A life insurance payout can ensure that your family can continue living in the home you worked hard to provide. It can cover the remaining mortgage balance, relieving loved ones of the financial pressure of monthly payments or the risk of having to sell the property.

Business owners
Whether you own a small company or have business partners, life insurance can help protect the future of your business. It can cover outstanding business debts, fund buy–sell agreements, or provide key-person coverage to keep operations running smoothly in your absence.

Couples with one primary earner
Suppose your household relies heavily on one person’s income. In that case, life insurance can help the surviving partner cover living expenses, manage household bills, and avoid financial instability while adjusting to a new reality.

Caregivers
If you provide financial or physical care for dependents, such as a child with disabilities or aging parents, life insurance can ensure that funds are available to continue that care and support in your absence.

What Type of Life Insurance Is Right For You?

Life insurance in Canada generally falls into two categories: term and permanent.² Which one is right for you depends on your lifestyle, financial situation, and coverage needs.

Term Life Insurance
Term insurance may be best for temporary needs. It covers you for a set period (e.g., 10, 20, or 30 years) and is typically the most affordable option. It’s ideal if you want to:

• Cover your mortgage because you can choose a term that matches your mortgage length, so your family won’t have to worry about making payments without you.
• Provide for children until they’re financially independent and ensure there’s enough support for school tuition, extracurriculars, and day-to-day costs until your kids are grown.
• Create an income replacement during your working years to help your family maintain their standard of living if you pass away before retirement.

Permanent Life Insurance
Permanent life insurance includes whole life and universal life insurance. It lasts your entire lifetime and builds cash value over time. Consider it if you:

• Want lifelong coverage, as it guarantees a payout, no matter when you die, which can provide lasting peace of mind.
• Want to leave an inheritance. Life insurance can create or preserve wealth to pass on to children, grandchildren, or a favorite charity.
• Need tax-sheltered investment growth. Some permanent policies allow you to accumulate investment gains within the policy, growing your wealth tax efficiently.
• Concerned about protecting your estate or legacy? Permanent life insurance helps cover estate taxes or final expenses, which allows your legacy to go to your loved ones, not the government.³

How Much Coverage Do You Need?

The amount of life insurance you need depends on your situation. A common rule of thumb is 10-15 times your annual income, but it’s better to calculate based on your real financial needs. Here are some guidelines to consider:

• Factor in your mortgage, personal loans, credit cards, and any other debts that your loved ones would have to manage.
• Consider how much your family would need each year to maintain their lifestyle, including housing, food, transportation, and healthcare.
• Don’t forget big-ticket items like your children’s post-secondary education or your spouse’s retirement needs.
• Subtract any savings, investments, or existing insurance (like a group policy from work) to avoid over-insuring.

Life insurance is about ensuring your loved ones can live without financial hardship if you can no longer provide for them financially. Life insurance should probably be part of your financial strategy if others depend on you. Talk to a licensed advisor and tailor a policy to your actual needs.

1. https://www.limra.com/en/newsroom/industry-trends/2024/nearly-one-third-of-canadian-adults-report-living-with-a-life-insurance-coverage-gap/
2. https://www.sunlife.ca/en/insurance/life/term-vs-whole/
3. https://www.schwab.com/learn/story/should-you-add-life-insurance-to-your-estate-plan

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.