Find out how cash value in life insurance works, its benefits like financial flexibility and tax advantages, and key considerations to keep in mind.
Life insurance for kids
May 08, 2026
By Sun Life staff
Understand the benefits of life insurance for children and how it can help support family financial security and future goals.
Key Takeaways
- Life insurance for children can help provide financial security to families.
- It may offer benefits like guaranteed insurability, cash value accumulation, and potentially lower premiums for lifelong coverage.
- It's essential to consider the typical features and costs before making a decision.
Life insurance for kids is a topic that many parents can overlook. This type of insurance can offer families peace of mind and may play a role in a broader financial strategy. In Canada, getting life insurance for a child can also help to ensure future insurability, regardless of health changes.
Understanding life insurance options for children can empower parents to make informed decisions that align with their family's unique needs and goals. Let’s explore what life insurance policies for children entail, their benefits, and key considerations before purchasing.
Types of life insurance for children
When considering insurance for kids, it's important to understand the two main types of life insurance policies available:
- Permanent life insurance: Provides lifelong coverage. Many permanent policies offer cash-value growth. It's a stable option that grows over time.
- Term life insurance: Offers coverage for a specific period. It’s typically more affordable than permanent insurance, but it doesn’t offer any cash value benefits.
- Learn more about the differences between term and permanent life insurance
Benefits of life insurance for children
| Insurability | Cash-value growth | Low cost premiums | Financial protection |
|---|---|---|---|
| Children can lock in coverage now with less chance of health-related restrictions. | Many permanent policies can accumulate cash value over time. | Insuring kids while they’re young can mean lower monthly costs. | Coverage helps financially protect against unexpected expenses after death. |
- Insurability: Helps ensure coverage for a child regardless of future health issues, safeguarding the child's insurability.
- Cash-value growth: Many permanent life policies accumulate cash value over time, which can help support savings for education, a first home, or other future needs. For instance, the cash value can be borrowed against for college tuition, providing financial flexibility without tapping into other savings.
- Lower cost premiums: Parents can benefit from significantly lower costs compared to purchasing a policy later when the child is older and potentially facing health issues.
- Financial protection: Life insurance can provide funds for final expenses, such as funeral costs or outstanding debts, helping families manage unforeseen situations during times of grief. For example, having a life insurance policy can prevent loved ones from facing financial burden in the event of a death.
Reasons why parents consider life insurance for their children
Parents may consider purchasing life insurance for various reasons, such as securing financial protection or building a financial foundation for their child's future. Here are some common motivations:
- Financial security: A policy can help provide funds for final expenses in the unfortunate event of a child's death.
- Future insurability: It can help children maintain their insurance coverage at a set price, regardless of changes to their health and lifestyle habits (e.g. risky hobbies and occupations) as they age.
- Establishing savings: The cash value component in a permanent policy can serve as a savings tool, potentially funding future educational needs.
- Peace of mind: Knowing that your child has financial protection in place can help alleviate stress for parents.
Key considerations for getting life insurance for a child
When evaluating the decision to purchase life insurance for children, it’s essential to consider the following:
Questions to ask yourself before buying
Before purchasing life insurance for your child, consider the following questions to help ensure you make the right decision:
Understand the difference between term and permanent life insurance and which may be more suitable. Depending on your family’s lifestyle and circumstances, you may need more than one type of policy. Learn more about having multiple life insurance policies
Evaluate your budget and how premiums will fit into your overall financial plan. Try our budget calculator to help you manage your spending and understand if you're falling short, breaking even or coming out ahead.
In Canada, children can generally be insured from as early as a few weeks old. Insuring a child at a young age can lock in lower premiums and ensure future insurability, regardless of health changes. Policies are usually purchased by a parent or legal guardian on behalf of the child.
The best time to purchase life insurance for your child is when they are young and healthy, as premiums are generally more affordable and guarantee insurability even if health issues arise later. Learn more about when to get life insurance
Coverage amounts can vary based on your financial goals and considerations for future expenses. You may want to assess potential costs related to education, final expenses, or other financial needs when determining the appropriate coverage amount. Try our life insurance calculator to find out how much coverage you may need
Yes, many policies can be converted or transferred to the child once they reach adulthood. This helps ensure they retain their coverage without needing to undergo additional medical underwriting
Yes, if you have a permanent life insurance policy with cash value, you may be able to borrow against it. This can provide you with access to funds for emergencies or important expenses without surrendering the policy. However, keep in mind that any unpaid loans will reduce the death benefit.
Finding the right policy involves assessing your family's financial needs, goals, and budget. Consider speaking with a Sun Life advisor who can provide personalized recommendations based on your unique situation and address any questions you may have.
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This article is meant to provide general information only. Sun Life Assurance Company of Canada does not provide legal, accounting, or taxation advice. Please seek such advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.
