Life insurance for new parents

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Why life insurance matters when you’re a new parent

When a child arrives, your responsibilities often change quickly. A household that used to support one or two adults may now need to support a child or multiple children. This can make life insurance worth a closer look.

Life insurance is protection that can help your family stay on track if you die. In the event of your death, having coverage can help your family with:

  • income replacement
  • mortgage payments or rent
  • child-care and education
  • groceries, household bills and living expenses
  • final expenses and other costs that may come up after a death

If you’re the main income earner, or if you both rely on each other’s income, life insurance can help create some breathing room for the people you love in case you die.

Types of life insurance for new parents

The main types to consider are term life insurance and permanent life insurance. Term life insurance gives coverage for a set period. Permanent life insurance gives coverage that can last for life, as long as the policy stays active. Both term and permanent life insurance can play a role for new parents. The right fit often depends on how long you need coverage, what you want to spend, and how much flexibility you want later. Depending on your family situation, you may need one type of policy or a blend of both policies. Some families may also consider mortgage protection solutions, which includes a term policy along with critical illness insurance.

Which type of life insurance is best for new parents?

To find out what’s right for you, start by comparing all your options. Here’s a look at the differences between these policies at a glance:

Term life insurancePermanent life insuranceMortgage protection solutions
Monthly cost*$20-30$160-395$30-60
Cash valueNoneAvailable for select permanent policiesNone
Coverage lengthAnywhere from 5-40 yearsLifetimeTerm insurance matches mortgage term
Best for parentsYoung families needing affordable protectionBuilding a legacy and cash-value savingsProtecting the ability to pay the mortgage in the event of a death or critical illness
Learn more about term life insuranceLearn more about permanent life insuranceLearn more about mortgage protection insurance

* These monthly rates are estimates and subject to change. The cost of your life insurance premiums (monthly or annual fees) depends on various factors, including your age, your assigned sex at birth, your current health and how much insurance you need. It also depends on what type of product you buy.

Learn more about the differences between term and permanent life insurance

Term life insurance for new parents

Term life insurance can provide substantial coverage at an affordable cost during the years when your children depend on you the most. For example, a 20 or 30 year term policy allows you to cover the period until your kids are grown and potentially self-sufficient, while premiums remain locked in and predictable.

Permanent life insurance for new parents

Permanent insurance offers lifetime coverage and may build cash value, but it's also more expensive because you’re insured for life. For new parents with limited budgets, the higher premiums may mean insufficient coverage amounts relative to cost. That said, permanent life insurance may be preferable for those with significant assets to protect or estate-planning needs.

Mortgage protection solutions for new parents

Sun Life’s mortgage protection solutions helps to safeguard your family's home if you were to die. Our solution combines term life coverage with critical illness insurance (CII), to help make sure your mortgage payments are covered if you die or face a serious health challenge.

Multiple policies for new parents

A combination approach can also work well. For example, you can obtain a substantial term policy as your primary coverage, then add a smaller permanent policy if budget allows. This gives you affordability and adequate protection now, plus some permanent coverage for longer-term needs.

The key is ensuring you have enough coverage to replace your income, pay off debts, cover childcare, and fund education.

How much life insurance do you need as a new parent?

There is no single amount that works for every family. The right coverage depends on your income, debts, housing costs, child-care needs, and future goals.

A common starting point is five to 10 times your annual income, but that’s only a guideline. You may want to think about:

  • how much income your family would need to replace
  • whether you have a mortgage, rent, or other debts
  • how long your child may need financial support
  • the cost of childcare or home care
  • education-savings goals
  • any savings, investments, or workplace benefits you already have

A simple way to begin is to add up the money your family would likely need in the short term, then think about longer-term needs as your child grows.

Our life insurance calculator can help you get started. Answer a few questions and get a quick estimate of how much insurance you may need to financially protect your children. Think of the estimate as a foundation for your decision, then compare your options and talk to a Sun Life advisor if you want help narrowing them down.

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Frequently asked questions

Many new parents already have group life insurance through work. That can be a helpful starting point, but it may not be enough on its own.

Group benefits can help bridge part of the gap. Still, workplace coverage can change if you change jobs, reduce your hours, or leave your employer. That means it may not stay with you for life.

It can help to ask:

  • How much coverage do I have at work?
  • Is the coverage enough for my family’s needs?
  • What happens if I change employers?
  • Do I need coverage that stays with me no matter what happens at work?
  • If I leave my employer, can I convert my workplace coverage into an individual life insurance policy?

Some families use workplace benefits as one layer of protection and individual life insurance as another. That can create more stability for the people who depend on you.

For many families, earlier is better to look at coverage because life can change quickly after a baby arrives. If you already know you want protection, it may help to start before you feel rushed by work changes, parental leave, or other big transitions.

Getting coverage earlier may also help some families access more options while they are younger and, in some cases, healthier. That said, every application is different. Approval and premium rates can still depend on the insurer’s underwriting process and your personal situation.

You may have just had a baby. Or, perhaps you’re expecting a child, adopting a child, or adjusting to life with a growing family. In any case, it can be a good time to review your needs with an advisor.

Yes. A stay-at-home parent has important financial value to the family. If that parent dies, the other parent may need to pay for child-care, home support, and other services.

  • Coverage can help replace the value of unpaid work.
  • It can also help the family adjust after a death.

It may be worth considering even if there is no paycheque to replace.

Absolutely. Single parents need to consider life insurance as their children depend entirely on their income. A policy worth at least 10 times your annual salary is normally recommended. It’s a good idea for single people in general to consider life insurance.

Learn more about life insurance for single parents

Additional resources

Life insurance for single parents

When you're raising children on your own, life insurance isn't just a nice-to-have; it can be a lifeline.

Family insurance

A family insurance solution can give you reassurance that your loved ones will be cared for, even in your absence or illness.

Life insurance for singles

Life insurance can benefit you regardless of your marital status. If you’re single, here’s why you may want to consider getting life insurance.

A Sun Life advisor can address all your questions and help you figure out which insurance product best meets your financial needs.

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This information is meant for educational and illustrative purposes only. Some conditions, exclusions and restrictions apply.

Reviewed by Jean Turcotte