Step 1: Calculate how much income your survivors will need each month.

Food: $
 
Clothing: $
 
Housing: $
Rent (mortgages discussed below) $
Property taxes $
Utilities $
Insurance premiums $
Home maintenance and repair $
 
Transportation: 
Public transit $
Car lease $
Car insurance, licence $
Car maintenance $
 
Education: $
 
Child care: $
 
Investments: 
Life insurance premiums $
RRSP contributions $
RESP contributions $
Other investments $
 
Vacations and entertainment: $
 
Other: $
 
TOTAL $ ________________________________ (A)

Step 2: To find out your survivors' annual income needs, multiply the monthly needs (A) by 12: $__________ (B)

Step 3: To determine the annual shortfall, calculate your survivors' current annual sources of income, plus any government benefits.

Salary (annual) $
Canada/Quebec Pension Plan benefits $
Survivor benefits $
Orphan benefits $
Interest and investment income $
Unemployment insurance $
Other sources of income $
TOTAL $______________________________ (D)
Subtract (D) from (B):
(B) $________________ — (D) $________________ = (E) $ ______________
This is the annual shortfall. If (E) is a negative number, calculate it as zero (0).

Step 4: Calculate immediate lump-sum expenses and debts.

Final expenses (funeral, burial) $
Mortgage(s) (unless there is mortgage insurance) $
Loans (car, student, business, personal) $
Legal/probate fees $
Business expenses $
Medical bills $
Income taxes $
Credit card debt $
Other debt $
TOTAL $________________________________ (F)

Step 5: Calculate any future lump-sum expenses, like a new car or children's university education. Also, calculate an amount to account for inflation, if necessary.

Car $
Education tuition fees $
Other future expenses $
Inflation $
TOTAL $_________________________________ (G)

Step 6: Calculate the amount of life insurance coverage you [or your client] will need.

6A. Divide annual shortfall (E) by 6% (or 0.06%; conservative), 8% (or 0.08%; less conservative), or
10% (or 0.1%; optimistic) to calculate future capital needs. (If annual shortfall is zero, go to step 6B.)
(E) $_____________ X [0.06 or 0.08 or 0.1] = $_______________ (H).

6B. Add:
Future capital needs (H): $
Immediate lump-sum expenseses and debts (G): + $
Future lump-sum expenses (F): + $
TOTAL: = $
 
Subtract any life insurance coverage you may already have through group and other insurance plans - $
TOTAL:  = $

This is the approximate amount of life insurance coverage you need today. Remember, an individual calculation should be done for each spouse/partner in a relationship. This needs analysis does not take into account inflation, which will magnify your life insurance needs over time. For a detailed analysis of your insurance needs, contact a qualified financial advisor.
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