💼 Income Protection
Your income is your household's most valuable asset. Life insurance is one tool that can protect what you've built if that income stops unexpectedly.
Why is income protection important?
Consider what would happen to your household if your income stopped tomorrow. For many Canadians, household finances depend heavily on one or two incomes. If a primary earner dies, the financial impact can be immediate and severe — even if the household has some savings.
Life insurance provides a tax-free lump sum to surviving family members, which can:
- Replace lost income for a defined period
- Clear debts that would otherwise require ongoing payments
- Fund childcare, household management, or retraining for the surviving partner
- Provide an emergency buffer during a difficult transition
How much income replacement is enough?
There is no single rule. A common approach is to calculate how many years of income replacement your family would need — typically based on:
- Number of years until your youngest child becomes financially independent
- Years until a surviving partner could realistically sustain themselves independently
- Existing savings and assets that could reduce the gap
Some financial planning frameworks suggest 5–10 times annual income as a starting point — but this varies widely with each household's circumstances.
Life insurance vs. disability insurance
Note that life insurance covers death — not incapacity. If you become unable to work due to illness or injury but are still living, life insurance does not pay out. Disability insurance is a separate product that covers income loss from inability to work. Many households need both.
Questions to ask an insurance advisor
- How many years of income does my household need replaced?
- Should we account for both partners' incomes, or just the primary earner?
- Does my employer group insurance provide meaningful coverage, or is it insufficient?
- How does disability insurance fit alongside life insurance?
- Should I consider income replacement insurance (a monthly benefit) in addition to life insurance?