When it comes to life insurance, a common rule of thumb for many people is having five to 10 times your annual income. That gives you a starting point, not a final answer. After that, you can adjust for the people who depend on you, the debts you carry, the savings you already have and whether you need coverage for a set period or for life. Your need may be higher or lower depending on your situation.
Life insurance needs aren't one-size-fits-all – several important factors will influence the right amount of coverage for your unique situation.
| Factor | How it can affect your coverage |
|---|---|
| Income | If others depend on your income, you may want enough coverage to replace part of that income for a period of time. |
| Debts | A mortgage, loan or credit card balance can increase the amount you may need. |
| Dependants | Children, a partner or other dependants can change how much support you may want to leave behind. |
| Savings and existing coverage | Savings, investments and any life insurance you already have may reduce the amount you need to buy now. |
| Life stage | Marriage, parenthood, a home purchase or retirement can all change your coverage needs. |
A life insurance calculator can give you a rough range based on your income, debts and existing coverage. Use our life insurance calculator to get a quick estimate of how much coverage you may need. Think of the estimate as a starting point, then compare your options and talk to a Sun Life advisor if you want help narrowing them down.
There are generally two main types of life insurance: term life insurance and permanent life insurance. Depending on your personal situation and financial goals, you may need one or multiple life insurance policies.
Within permanent life insurance, you’ll come across products such as whole life, participating life and universal life. These products are all permanent policies, but they can work differently, so it helps to compare how each one fits your goals.
If your need is tied to a specific period, term life insurance may be a practical choice. If you want coverage that can last for life, a permanent life insurance policy may be worth a closer look.
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Premiums (monthly or annual payments for life insurance) vary by age, assigned sex at birth, smoking status, health, lifestyle, coverage amount and policy features. View sample rates for life insurance and find out how much you may have to pay in premiums.
Coverage length depends on what you want to protect and for how long.
As an example, for a younger person, or a couple with debt and a mortgage, a 30-year term policy may be suitable. But for someone in their 40s with little debt and a small mortgage, a 10-year policy might be right.
Connect with a Sun Life advisor to talk through which insurance products may fit your situation.
The right type of life insurance depends on your goals, budget and how long coverage is needed. Connect with a Sun Life advisor for help comparing your options.
It depends on your situation. 5-10 times a person’s salary is a general rule of thumb that works for some, but not everyone. Your actual need may be higher or lower based on debts, dependants, and existing assets. Connect with a Sun Life advisor to find out how much insurance you may need.
Yes, potentially. Even without children, life insurance can help cover your debts (e.g. mortgage, loans), provide for a surviving spouse, handle funeral costs, or support aging parents in the event of your death.
Yes. A mortgage is a significant debt that your family or loved ones would need to manage if you were to die. Including it in your life insurance calculation helps ensure your family isn't burdened with housing payments.
Not always. Having life insurance through your employer is a good starting point, but it's often insufficient on its own. Most employer plans provide limited coverage and don't account for your debts, dependants, or future expenses. Plus, this coverage ends if you leave your job. To determine if you need more coverage, connect with a Sun Life advisor
Learn about life insurance costs and factors that may affect how much you pay.
Find out how much a term policy may cost you.
Find out how much a whole life (permanent) policy may cost you.
This information is meant for educational and illustrative purposes only. Some conditions, exclusions and restrictions apply.
Reviewed by Jean Turcotte
