Jul 3, 2026
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Canadians now hold a record $6 trillion in life insurance coverage, spread across 23 million policyholders, according to data published in the Insurance Business of Canada. That number looks reassuring until it's measured against what households actually need to replace lost income and pay off debt.
A new study from Toronto-based MyChoice, drawing on Statistics Canada, CMHC and CLHIA data, finds the average Canadian household should carry roughly $595,000 in insurance coverage but holds only about $509,000 — a gap of 14.5%.
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The shortfall is widest in Ontario, where households need close to $794,000 but hold an estimated $552,000, a gap of more than 30%.
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The problem isn't that Canadians are buying less insurance. It's that coverage bought years ago hasn't kept pace with bigger mortgages, higher salaries and larger financial obligations. With more than 1.2 million mortgages set to renew this year, that mismatch is becoming harder to ignore.
Why record insurance coverage hides a real debt shortfall
While total life insurance coverage keeps climbing, nationally, year-over-year, the shortfall exists because the average policy held by Canadians reflects a decision made at a single point in time.
“Nationally, the total amount of life insurance coverage has increased, but much of that coverage was locked in years ago,” said Vitalii Starov, vice-president of product growth at MyChoice. Since then, mortgage balances have grown, consumer debt has risen, and incomes have increased — all of which change how much protection a household actually needs. Based on the analysis from MyChoice, mortgage debt now makes up roughly three-quarters of total household debt in Canada. A policy that once covered a mortgage balance in full may now leave a much larger gap exposed. That gap tends to stay invisible until it's tested — most households only discover a shortfall after a death, a disability or a mortgage renewal forces the numbers into view.
Traditional insurance options aren't your only choice. Evaluating how different plans stack up can help ensure your family has the right level of protection. Online providers can help. For instance you can get a PolicyMe term life insurance policy with coverage up to $5 million with premiums starting at just $21 per month — making it easier for you to secure your family’s financial future. Just answer four questions, and PolicyMe will provide you with an instant, no-obligation quote valid up to 90 days. Most policies are approved without any medical tests, and you can opt for term lengths ranging from 10 to 30 years. Get a free, no-obligation quote today with PolicyMe.
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Ontario's gap is the widest in the country
The widest gap is held by mortgage holders and those with life insurance coverage and living in Ontario. The Ontario shortfall, which is more than 30% of total debt, is the largest in the nation, followed by Quebec (at 25%) and Alberta (at 21%). Despite high housing prices, British Columbia residents are underinsured by just over 16%, while Manitoba and Nova Scotia are close to balanced, with average coverage roughly matching estimated need, according to data published in the Insurance Business of Canada.
Starov attributes Ontario's gap largely to the province carrying the highest average mortgage balances in the country, amplified by rising non-mortgage debt and higher average salaries. For a household carrying a seven-figure mortgage in the Greater Toronto Area or Ottawa, that shortfall can be the difference between a family staying in their home after an unexpected death and having to sell.
It can be overwhelming trying to balance the right coverage and a manageable premium. But it doesn't have to be complicated. An easy way to compare premiums is to shop online. For instance, BlueCross can help protect what matters most with coverage starting at $15 per month. Blue Cross Life offers flexible term options (ranging from 10 to 30 years) with pricing that’s on par or better than digital insurers — and lower than most traditional providers. Use their 100% online application to get approved in just 20 minutes, usually without a medical exam.
The mortgage renewal wave makes this the moment to check
More than 1.2 million Canadian mortgages were renewed in 2025, and the renewal wave is expected to continue into 2026. For homeowners whose life insurance was purchased when their mortgage balance — or their income — looked different, a renewal is a natural trigger to revisit coverage.
And the stakes are real. Canada's life and health insurers paid out $18.6 billion in life insurance benefits in 2024, including $8.9 billion in death benefits. Life insurance remains one of the most direct ways to keep a mortgage from becoming an unmanageable burden for survivors.
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How to tell if your coverage is enough
To determine if you have enough life insurance coverage, you need to start with the math, not the premium. Add up your outstanding mortgage balance, other debts and 5 to 10 years of income replacement, then compare that total against your current death benefit.
For example, if a homeowner carrying a $550,000 mortgage, $30,000 in consumer debt and an annual household income of $90,000 might reasonably target 5 to 10 years of income replacement — pushing total coverage need above $900,000 once the mortgage and other debts are combined. That means a $500,000 policy that felt generous a decade ago could now cover barely half of what that household actually needs.
If your policy hasn't been reviewed in three years or more, a review — not necessarily a new purchase — is often the right first step. In some cases, reallocating coverage between partners or adjusting term length can reduce a gap without a large increase in premiums.
Comparing quotes through a licensed broker can confirm whether closing the gap costs as little as most Canadians assume.
Ready for peace of mind? It’s worth considering how your family would manage without you around. To get a clear picture use a quick online calculator to estimate your actual coverage needs and see how a tailored life insurance policy can give you peace of mind and comfortably fit your budget. For instance, in just a few minutes you can get a free, no-obligation online quote with PolicyMe. Get coverage from the comfort of your home with PolicyMe’s instant online decision — making it easier to secure your financial safety net.
What to do now
- Add up your outstanding mortgage balance, other debts and 5 to 10 years of income replacement, then compare that total against your current death benefit
- If your policy has not been reviewed in 3 years or more, request a review — a mortgage renewal, salary increase or new child can change what you need
- If you rely mainly on employer group life insurance, remember it typically ends when your job does — the national average of $509,000 in personal coverage may not fill that gap on its own
- Compare quotes through a licensed broker if the math shows you are underinsured
A decision worth making before renewal, not after
A life insurance gap doesn't resolve itself. It compounds quietly every time a mortgage grows, a raise arrives or a policy sits untouched. A mortgage renewal, a new child or a job change is as good a prompt as any to run the numbers again — before a shortfall becomes someone else's problem to solve. This isn't a case for buying the biggest policy available; it's a case for making sure the size of the policy matches the size of the obligation. For most Canadians, that's a five-minute calculation, not a five-figure decision.
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Romana King, Senior Editor at Money.ca, also writes for various North American publications and the RKHomeowner blog. Her book, House Poor No More, is an Amazon bestseller and five-time award winner, including the 2022 New York CPA Society's Excellence in Financial Journalism (EFJ) Book Award.
