How much can $1,000,000 policy cover and what does it cost?
How much can $2,000,000 policy cover and what does it cost?
How much can $3,000,000 policy cover and what does it cost?
How much can $4,000,000 policy cover and what does it cost?
How much can $5,000,000 policy cover and what does it cost?
How much can $6,000,000 policy cover and what does it cost?
Final word: large life insurance policies
Life insurance may not be the first financial product that comes to mind when planning your future, but it is undoubtedly one of the most important. Designed not for the breadwinner themselves, but to protect their loved ones — such as a spouse and children — it provides critical financial security in the event of an unexpected loss.
This article explores how different life insurance policies can help bridge the financial gaps left behind when the main breadwinner passes away and what costs are associated with each type of policy.
Life insurance policies are designed to cover several key categories of financial gaps that arise after the loss of a primary earner.
For this analysis, we consider an average Canadian family with both spouses around 35 years old and two children, aged 5 and 10. The family carries an average mortgage of $400,000, a car loan of $30,000, and credit card debt of $5,000 per adult. The primary breadwinner earns $80,000 annually.
To simplify the analysis, we assume that the entire policy amount is used to cover various expense categories and replace lost income, rather than investing all or part of it.
A $1,000,000 life insurance policy often falls short of covering all financial needs after the loss of a primary earner.
While it might cover an average outstanding mortgage, a car loan, credit card debt, and the cost of raising one child to age 22 (if that child is around 5 years old), it only partially covers the expenses for a second child aged 10.
Crucially, this amount leaves little to no room for final expenses, emergency funds, or income replacement. For most families, such a policy size is simply not sufficient to provide comprehensive financial security.
| Category | Financial need | Amount | Covered? |
| First category: Immediate expenses | Mortgage (average size, Ontario) | $400,000 | ✓ |
| Car loan (average size), used car | $30,000 | ✓ | |
| Credit card debt (1st spouse) | $5,000 | ✓ | |
| Credit card debt (2nd spouse) | $5,000 | ✓ | |
| Cost of raising Child #1 until age 22 (currently 5 years old; 17 years remaining) | $380,000 | ✓ | |
| Cost of raising Child #2 until age 22 (currently 10 years old; 12 years remaining) | $265,000 | Partially covered | |
| Final / burial expenses | $25,000 | Not covered | |
| Emergency fund | $100,000 | Not covered | |
| Sub-total | $1,210,000 | ||
| Second category: Income Replacement | Salary income of primary earner: $80,000 annually, with 30 working years remaining (considering tax deductions and inflation) | $1,550,000 | Not covered |
| Retirement income of primary earner (CPP/pension benefits): $18,000 annually — 20 years until retirement (considering inflation) | $260,000 | Not covered | |
| Additional cost of living burden on survivors (e.g. extra costs managing children, grief counseling) ($10,000/year for 7 years) | $70,000 | Not covered | |
| Sub-total | $1,880,000 | ||
| Third category: Optional expenses | Prestigious master’s degree abroad e.g. U.S. (2-Year Master’s Program) | $100,000 | Not covered |
| Assisting Child #1 with the initial 20% mortgage down payment on a one-bedroom condo in Toronto | $150,000 | Not covered | |
| Assisting Child #2 with the initial 20% mortgage down payment on a one-bedroom condo in Toronto | $150,000 | Not covered | |
| Sub-total | $400,000 | ||
| Total | $3,490,000 |
Life insurance costs vary by type. Term life insurance is the most affordable, offering coverage for a set period with no savings component. Permanent life insurance, like whole life, provides lifelong protection and includes a cash value feature, making it more expensive. Below are sample costs in 2025 for a $1,000,000 policy for a healthy, non-smoking 35-year-old male and female, comparing term and permanent options.
| Policy | $1,000,000, 20-year term for a 35-year-old FEMALE non-smoker in good health | $1,000,000, 20-year term for a 35-year-old MALE non-smoker in good health |
| 20-term life insurance policy (purely insurance) | $39/month | $53/month |
| 30-term life insurance policy (purely insurance) | $74/month | $102/month |
| Whole life insurance policy (insurance + investments) | $490/month | $595/month |
A $2,000,000 life insurance policy provides significantly more coverage than a $1,000,000 policy, but it may still fall short of offering complete financial protection in the event of the loss of a primary earner. It is typically sufficient to cover immediate expenses such as outstanding mortgage balances, funeral and burial costs, and childcare for two young children (ages 5 and 10). It can also include a healthy emergency fund of around $100,000.
However, this level of coverage only partially replaces the lost income of the primary earner. It will not compensate for the long-term financial impact, such as the loss of Canada Pension Plan (CPP) or employer pension benefits, or additional living costs that survivors may face.
For many families — particularly those with two or more children — this amount may still be inadequate to ensure long-term financial security and true peace of mind.
| Category | Financial need | Amount | Covered? |
| First category: Immediate expenses | Mortgage (average size, Ontario) | $400,000 | ✓ |
| Car loan (average size), used car | $30,000 | ✓ | |
| Credit card debt (1st spouse) | $5,000 | ✓ | |
| Credit card debt (2nd spouse) | $5,000 | ✓ | |
| Cost of raising Child #1 until age 22 (currently 5 years old; 17 years remaining) | $380,000 | ✓ | |
| Cost of raising Child #1 until age 22 (currently 10 years old; 12 years remaining) | $265,000 | ✓ | |
| Final / burial expenses | $25,000 | ✓ | |
| Emergency fund | $100,000 | ✓ | |
| Sub-total | $1,210,000 | ||
| Second category: Income Replacement | Salary income of primary earner: $80,000 annually, with 30 working years remaining (considering tax deductions and inflation) | $1,550,000 | Partially covered |
| Retirement income of primary earner (CPP/pension benefits): $18,000 annually — 20 years until retirement (considering inflation) | $260,000 | Not covered | |
| Additional cost of living burden on survivors (e.g. extra costs managing children, grief counseling) ($10,000/year for 7 years) | $70,000 | Not covered | |
| Sub-total | $1,880,000 | ||
| Third category: Optional expenses | Prestigious master’s degree abroad e.g. U.S. (2-Year Master’s Program) | $100,000 | Not covered |
| Assisting Child #1 with the initial 20% mortgage down payment on a one-bedroom condo in Toronto | $150,000 | Not covered | |
| Assisting Child #2 with the initial 20% mortgage down payment on a one-bedroom condo in Toronto | $150,000 | Not covered | |
| Sub-total | $400,000 | ||
| Total | $3,490,000 |
The cost of life insurance depends on the type of policy. Term life insurance is the most budget-friendly option, providing coverage for a fixed number of years without any built-in savings. In contrast, permanent life insurance — such as whole life — offers lifelong protection and includes a cash value component, which makes it more costly. Below are example term life rates in 2025 for a healthy 35-year-old non-smoking male and female seeking $2,000,000 in coverage.
| Policy | $2,000,000, 20-year term for a 35-year-old FEMALE non-smoker in good health | $2,000,000, 20-year term for a 35-year-old MALE non-smoker in good health |
| 20-term life insurance policy (purely insurance) | $74/month | $102/month |
| 30-term life insurance policy (purely insurance) | $144/month | $200/month |
A $3,000,000 life insurance policy offers a solid level of financial protection in the event of the loss of a primary earner.
It typically covers immediate needs such as outstanding mortgage balances, funeral and burial costs, and childcare expenses for two young children (ages 5 and 10). It can also provide a robust emergency fund of around $100,000.
This level of coverage can replace most of the income previously earned by the deceased, along with majority of long-term benefits such as CPP or pension income. It does not offset though the additional cost of living burden placed on surviving family members.
It will leave no room for discretionary financial goals, such as funding a prestigious international graduate program for a child (e.g., in the U.S. or Europe), or helping adult children with a down payment on their first home.
For families with two or more children, a $3,000,000 policy is a strong foundation, but it may not fully cover all aspirational or legacy-oriented expenses beyond the essentials.
| Category | Financial need | Amount | Covered? |
| First category: Immediate expenses | Mortgage (average size, Ontario) | $400,000 | ✓ |
| Car loan (average size), used car | $30,000 | ✓ | |
| Credit card debt (1st spouse) | $5,000 | ✓ | |
| Credit card debt (2nd spouse) | $5,000 | ✓ | |
| Cost of raising Child #1 until age 22 (currently 5 years old; 17 years remaining) | $380,000 | ✓ | |
| Cost of raising Child #1 until age 22 (currently 10 years old; 12 years remaining) | $265,000 | ✓ | |
| Final / burial expenses | $25,000 | ✓ | |
| Emergency fund | $100,000 | ✓ | |
| Sub-total | $1,210,000 | ||
| Second category: Income Replacement | Salary income of primary earner: $80,000 annually, with 30 working years remaining (considering tax deductions and inflation) | $1,550,000 | ✓ |
| Retirement income of primary earner (CPP/pension benefits): $18,000 annually — 20 years until retirement (considering inflation) | $260,000 | Partially covered | |
| Additional cost of living burden on survivors (e.g. extra costs managing children, grief counseling) ($10,000/year for 7 years) | $70,000 | Not covered | |
| Sub-total | $1,880,000 | ||
| Third category: Optional expenses | Prestigious master’s degree abroad e.g. U.S. (2-Year Master’s Program) | $100,000 | Not covered |
| Assisting Child #1 with the initial 20% mortgage down payment on a one-bedroom condo in Toronto | $150,000 | Not covered | |
| Assisting Child #2 with the initial 20% mortgage down payment on a one-bedroom condo in Toronto | $150,000 | Not covered | |
| Sub-total | $400,000 | ||
| Total | $3,490,000 |
Life insurance pricing depends on the policy type. Term life insurance is typically the most affordable, providing coverage for a limited time without any investment feature. Permanent life insurance — like whole life — includes lifelong coverage and a built-in savings component, which results in higher premiums. Below are 2025 sample term life rates for a healthy, non-smoking 35-year-old male and female seeking $3,000,000 in coverage.
| Policy | $3,000,000, 20-year term for a 35-year-old FEMALE non-smoker in good health | $3,000,000, 20-year term for a 35-year-old MALE non-smoker in good health |
| 20-term policy (purely insurance) | $108/month | $150/month |
| 30-term policy (purely insurance) | $215month | $292/month |
A $4,000,000 life insurance policy provides comprehensive protection. It can cover immediate expenses such as outstanding mortgage and debt obligations, the cost of raising children, and a sufficient emergency fund. Beyond that, it offers full replacement of the primary earner’s income as well as lost CPP or pension benefits.
In addition, this level of coverage gives families the flexibility to support major future expenses — such as contributing to children’s education abroad or helping with a down payment on their first home. Even after meeting these needs, the policy still leaves more than $500,000 to cover other unexpected costs.
For families with two or more children, a $4,000,000 policy can offer a meaningful level of financial security — often enough to bring peace of mind in the event of the loss of the primary income earner.
| Category | Financial need | Amount | Covered? |
| First category: Immediate expenses | Mortgage (average size, Ontario) | $400,000 | ✓ |
| Car loan (average size), used car | $30,000 | ✓ | |
| Credit card debt (1st spouse) | $5,000 | ✓ | |
| Credit card debt (2nd spouse) | $5,000 | ✓ | |
| Cost of raising Child #1 until age 22 (currently 5 years old; 17 years remaining) | $380,000 | ✓ | |
| Cost of raising Child #1 until age 22 (currently 10 years old; 12 years remaining) | $265,000 | ✓ | |
| Final / burial expenses | $25,000 | ✓ | |
| Emergency fund | $100,000 | ✓ | |
| Sub-total | $1,210,000 | ||
| Second category: Income Replacement | Salary income of primary earner: $80,000 annually, with 30 working years remaining (considering tax deductions and inflation) | $1,550,000 | ✓ |
| Retirement income of primary earner (CPP/pension benefits): $18,000 annually — 20 years until retirement (considering inflation) | $260,000 | ✓ | |
| Additional cost of living burden on survivors (e.g. extra costs managing children, grief counseling) ($10,000/year for 7 years) | $70,000 | ✓ | |
| Sub-total | $1,880,000 | ||
| Third category: Optional expenses | Prestigious master’s degree abroad e.g. U.S. (2-Year Master’s Program) | $100,000 | ✓ |
| Assisting Child #1 with the initial 20% mortgage down payment on a one-bedroom condo in Toronto | $150,000 | ✓ | |
| Assisting Child #2 with the initial 20% mortgage down payment on a one-bedroom condo in Toronto | $150,000 | ✓ | |
| Sub-total | $400,000 | Unused coverage: $510,000 | |
| Total | $3,490,000 |
The cost of life insurance depends heavily on the type of policy you choose. Term life offers time-limited protection at lower premiums, with no savings component. In contrast, permanent life insurance — such as whole life — provides lifelong coverage and builds cash value, resulting in significantly higher costs. Below are sample 2025 term life premiums for healthy, non-smoking 35-year-old males and females seeking $4,000,000.
| Policy | $4,000,000, 20-year term for a 35-year-old FEMALE non-smoker in good health | $4,000,000, 20-year term for a 35-year-old MALE non-smoker in good health |
| 20-term life insurance policy (purely insurance) | $143/month | $199/month |
| 30-term life insurance policy (purely insurance) | $285/month | $389/month |
A $5,000,000 life insurance policy — often classified as a “jumbo” or “large-case” policy — offers extensive financial protection well beyond the basics. It ensures that all immediate financial responsibilities are fully addressed, including paying off a mortgage, settling outstanding debts, covering funeral and final expenses, and funding day-to-day needs such as childcare, household support, or medical costs.
Crucially, it also allows for complete income replacement in the event of the loss of the primary earner, while accounting for the future loss of CPP or private pension benefits. With this level of coverage, families can confidently plan for longer-term goals such as funding international university degrees for children, supporting adult children with the purchase of a first home, or helping aging parents with care costs.
What sets this level of coverage apart is the additional financial flexibility it provides. After all core obligations are covered, a meaningful portion of the benefit can be preserved and invested — generating ongoing income to help sustain the family’s lifestyle or provide for future generations. For families with multiple dependents or intergenerational financial priorities, a $5,000,000 policy can offer not just protection, but long-term peace of mind and lasting impact.
| Category | Financial need | Amount | Covered? |
| First category: Immediate expenses | Mortgage (average size, Ontario) | $400,000 | ✓ |
| Car loan (average size), used car | $30,000 | ✓ | |
| Credit card debt (1st spouse) | $5,000 | ✓ | |
| Credit card debt (2nd spouse) | $5,000 | ✓ | |
| Cost of raising Child #1 until age 22 (currently 5 years old; 17 years remaining) | $380,000 | ✓ | |
| Cost of raising Child #1 until age 22 (currently 10 years old; 12 years remaining) | $265,000 | ✓ | |
| Final / burial expenses | $25,000 | ✓ | |
| Emergency fund | $100,000 | ✓ | |
| Sub-total | $1,210,000 | ||
| Second category: Income Replacement | Salary income of primary earner: $80,000 annually, with 30 working years remaining (considering tax deductions and inflation) | $1,550,000 | ✓ |
| Retirement income of primary earner (CPP/pension benefits): $18,000 annually — 20 years until retirement (considering inflation) | $260,000 | ✓ | |
| Additional cost of living burden on survivors (e.g. extra costs managing children, grief counseling) ($10,000/year for 7 years) | $70,000 | ✓ | |
| Sub-total | $1,880,000 | ||
| Third category: Optional expenses | Prestigious master’s degree abroad e.g. U.S. (2-Year Master’s Program) | $100,000 | ✓ |
| Assisting Child #1 with the initial 20% mortgage down payment on a one-bedroom condo in Toronto | $150,000 | ✓ | |
| Assisting Child #2 with the initial 20% mortgage down payment on a one-bedroom condo in Toronto | $150,000 | ✓ | |
| Sub-total | $400,000 | Unused coverage: $1,510,000 | |
| Total | $3,490,000 |
The cost of life insurance depends heavily on the type of policy selected. Term life insurance offers coverage for a set period at a lower cost, with no cash value. Permanent life insurance, such as whole life, provides lifelong protection and includes a savings component, making it significantly more expensive.
At coverage levels of $5,000,000 and above, policies are classified as “jumbo” or “large-case” and often involve additional requirements. These may include:
Below are sample 2025 term life premiums for healthy, non-smoking 35-year-old males and females seeking $5,000,000 in coverage.
| Policy | $5,000,000, 20-year term for a 35-year-old FEMALE non-smoker in good health | $5,000,000, 20-year term for a 35-year-old MALE non-smoker in good health |
| 20-term life insurance policy (purely insurance) | $176/month | $243/month |
| 30-term life insurance policy (purely insurance) | $355/month | $485/month |
A $6,000,000 life insurance policy sits at the upper end of personal coverage and is considered a jumbo or large-case policy by most insurers. With this size of policy, families are not only protected against short-term financial shocks, but also positioned to build multi-generational financial resilience.
The core expenses — such as clearing a mortgage, settling personal loans and credit obligations, funeral costs, and providing for child care and daily living expenses — are easily covered. It also fully replaces the lost income of the primary earner, including the value of CPP or private pension payments that would no longer be received.
What distinguishes this level of coverage is the ability to go far beyond financial basics. For instance, families can earmark funds for high-cost opportunities such as sending children to Ivy League or top-tier European universities, providing a solid payment for each child’s future home, or even making charitable donations or supporting a family trust.
After all planned uses are accounted for, there may still be $1,000,000 or more available for investment. With prudent financial planning, this remainder can generate long-term returns — offering an additional income stream or growing into a legacy fund. For families with complex financial needs or multiple generations to support, a $6,000,000 policy offers both security and flexibility for the road ahead.
| Category | Financial need | Amount | Covered? |
| First category: Immediate expenses | Mortgage (average size, Ontario) | $400,000 | ✓ |
| Car loan (average size), used car | $30,000 | ✓ | |
| Credit card debt (1st spouse) | $5,000 | ✓ | |
| Credit card debt (2nd spouse) | $5,000 | ✓ | |
| Cost of raising Child #1 until age 22 (currently 5 years old; 17 years remaining) | $380,000 | ✓ | |
| Cost of raising Child #1 until age 22 (currently 10 years old; 12 years remaining) | $265,000 | ✓ | |
| Final / burial expenses | $25,000 | ✓ | |
| Emergency fund | $100,000 | ✓ | |
| Sub-total | $1,210,000 | ||
| Second category: Income Replacement | Salary income of primary earner: $80,000 annually, with 30 working years remaining (considering tax deductions and inflation) | $1,550,000 | ✓ |
| Retirement income of primary earner (CPP/pension benefits): $18,000 annually — 20 years until retirement (considering inflation) | $260,000 | ✓ | |
| Additional cost of living burden on survivors (e.g. extra costs managing children, grief counseling) ($10,000/year for 7 years) | $70,000 | ✓ | |
| Sub-total | $1,880,000 | ||
| Third category: Optional expenses | Prestigious master’s degree abroad e.g. U.S. (2-Year Master’s Program) | $100,000 | ✓ |
| Assisting Child #1 with the initial 20% mortgage down payment on a one-bedroom condo in Toronto | $150,000 | ✓ | |
| Assisting Child #2 with the initial 20% mortgage down payment on a one-bedroom condo in Toronto | $150,000 | ✓ | |
| Sub-total | $400,000 | Unused coverage: $2,510,000 | |
| Total | $3,490,000 |
Life insurance pricing depends greatly on the type of policy selected. Term life insurance provides coverage for a fixed number of years and is typically the most affordable option, as it does not include a savings or investment component. In contrast, permanent life insurance — such as whole life — offers lifetime protection and builds cash value over time, which significantly increases the cost.
When applying for $6,000,000 or more in coverage, policies are generally classified as “large-case” or “jumbo” policies and come with stricter underwriting standards. Applicants can expect:
Below are illustrative 2025 term life premiums for healthy, non-smoking 35-year-old men and women applying for $6,000,000 in life insurance.
| Policy | $6,000,000, 20-year term for a 35-year-old FEMALE non-smoker in good health | $6,000,000, 20-year term for a 35-year-old MALE non-smoker in good health |
| 20-term life insurance policy (purely insurance) | $210/month | $291/month |
| 30-term life insurance policy (purely insurance) | $425/month | $585/month |
For a family with two children, life insurance policies of $1,000,000 or even $2,000,000 typically fall short of providing sufficient financial protection in the event of the primary breadwinner’s death. These lower coverage amounts often do not fully cover all immediate expenses and fail to adequately replace lost income.
A $3,000,000 policy comes close to covering most essential expenses as well as income and pension replacement but does not leave much room for additional discretionary spending, such as helping children with their first mortgage or other major expenses.
A $4,000,000 policy offers greater peace of mind by covering essential costs and providing more complete income replacement.
Policies of $5,000,000 and $6,000,000 — considered large-case or jumbo policies — deliver the ultimate financial security. They cover all immediate obligations, replace both working and retirement incomes, and support discretionary expenses like assisting children with home purchases or education abroad. Additionally, these higher coverage levels leave a financial reserve that can generate ongoing investment income for the family’s future needs.
For the most competitive life insurance rates (term life insurance, whole life insurance or other life insurance solutions), it’s important to partner with an independent advisor who can compare offerings from multiple providers. Our specialists work with over 20 Canadian life insurance companies — giving you access to a wider range of products than most brokerages and helping you identify cost-effective coverage options.
To begin, fill out the life insurance quote form on the sidebar for a free, no-obligation consultation. We’ll guide you in finding the right protection for your family.
