The income multiple approach
Multiplying annual income by a factor gives a ballpark in seconds. Useful to start a conversation, but the method ignores your actual debts, your existing assets, and how long the need lasts.
The needs approach
You add up what the benefit must accomplish: clear debts, replace income for a defined number of years, fund education, cover costs at death, then subtract available assets and coverage already in place. It is the most defensible method.
The human capital approach
You estimate the present value of your future income to retirement. It suits a young household whose main asset is earning capacity, and often yields a higher figure than the other two.
Latent tax, the classic omission
At death, certain assets are deemed disposed of: a rental property, a cottage, securities with accrued gains, an RRSP not rolled to a spouse. The resulting tax is payable by the estate, often in cash.
What is already covered
Group coverage through an employer, protection tied to the mortgage, a survivor pension from a public plan: these lower the net need, but they end or change with employment and are not all portable.
The amount gets revised
A birth, a purchase, a separation, a debt paid off, or a job change all alter the calculation. An amount set once and never revisited becomes wrong within a few years.
No rate, price, or recommendation on this page. Amounts and limits change: verify them with official sources before deciding.