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A guide to life insurance for new parents
September 25, 2025
By Paul Moser
Becoming a parent changes everything – including how you think about your family's financial future. Whether you're welcoming your first child or thinking of starting a family, you'll need protection that grows with your changing needs.
When my daughter was born, I felt overwhelmed by all the new duties and responsibilities: feeding schedules, changing diapers, working around sleep times, new and ever-changing sizes of clothes, and so much more!
Almost lost in that tornado of activity were the financial considerations, including what would happen to my child, if something happened to me? That’s when I started to think about life insurance.
By understanding your options and finding life insurance coverage that gives your family the security they need, you can focus on the joy of watching your children grow.
Why life insurance matters for your growing family in Canada
According to recent statistics, only 43% per cent of Canadian parents with minor children have life insurance, leaving many families vulnerable to financial hardship.
Life insurance helps ensure your loved ones can maintain their quality of life, even if you're no longer there to provide for them.
Here are three key benefits:
1. Protecting your children's financial security
With the average cost of raising a child in Canada around $17,000 per year, and tuition costs increasing 2.9% annually, having adequate coverage helps ensure your children's needs will be met. Your policy can help cover:
- Daily living expenses including food, clothing, and child care
- Education costs from primary school through university tuition
- Mortgage payments or rent to keep your family in their home
2. Creating a safety net for single parents
For single parents, life insurance can be even more critical.
Having the right amount of life insurance helps maintain stability by covering outstanding debts, providing income replacement, and ensuring children can continue their activities and education without disruption.
This safety net can bring peace of mind – and support future financial stability – when there isn't a second parent to step in financially.
3. Supporting your family's long-term goals
Beyond immediate needs, life insurance can help secure your family's long-term financial objectives.
Whether it's funding your children's education through a registered education savings plan (RESP), maintaining mortgage payments, or preserving retirement savings for your spouse, life insurance coverage can help your family pursue the future you planned together.
63% of Canadians believe insurance coverage is one way to take control over an unpredictable situation. Life insurance plays such an important role in protecting your family. That’s why it can become a foundation for your family’s finances.
What’s the best life insurance for new parents?
For new parents, finding the right life insurance means balancing immediate protection with long-term security. The best option depends on your family's specific needs, budget, and future goals.
Term life insurance is well suited for young families, because it’s affordable and straightforward coverage. Permanent options can provide lifelong protection.
Here's a look at the different kinds of life insurance and their features:
| Feature | Term life | Whole life | Universal life | Mortgage protection |
|---|---|---|---|---|
| Monthly cost | $20-30 | $160-395 | $100-250 | $30-60 |
| Cash value | None | Guaranteed growth | Payment flexibility and opportunity for tax-preferred growth | None |
| Coverage length | 10-30 years | Lifetime | Lifetime | Term insurance matches mortgage term |
| Best for parents | Young families needing affordable protection | Building legacy and cash savings | Flexible payments and opportunity for tax-preferred growth | Protecting the ability to pay the mortgage in the event of a death or critical illness |
| More details | Learn more about Term life insurance | Learn more about Whole life insurance | Learn more about Universal life insurance | Learn more about mortgage protection insurance |
Note: Cash value in permanent policies can be borrowed against or withdrawn to pay, for example, education expenses. Learn more about cash value and how it works.
Option 1: A family insurance solution
Sun Life's family insurance solutions provide comprehensive protection tailored specifically for parents with young families. You can work with an advisor to design a plan to financially protect your family, using a combination of insurance solutions.
Option 2: Term life insurance for young parents
Term life insurance offers affordable protection during your children's most dependent years. A good general guideline is to have coverage that equals five to 10 times your annual income. Term policies are budget-friendly, making them an accessible way to protect your family without straining finances. Consider the example of a non-smoking 30-year-old, assigned female at birth. A 10-year term life insurance policy could cost as little as $8.55 per month for $100,000 of coverage.
Option 3: Permanent coverage for lifelong protection
Permanent life insurance provides lifelong protection. Depending on the product you choose, your policy can build cash value over time.
Both whole life and universal life insurance offer guaranteed coverage that never expires, regardless of changes to your health, as long as you pay the premiums. Whole life insurance includes stable premiums and, depending on the product you choose, guaranteed cash-value growth. Universal life insurance offers flexible premiums and investment account options to help you build tax-preferred savings within your policy.
Option 4: Mortgage protection solutions
Mortgage protection insurance helps to safeguard your family's home if something happens to you. Sun Life's solution combines term life coverage with critical illness insurance (CII), to help make sure your mortgage payments are covered if you pass away or face a serious health challenge.
How much life insurance do parents really need?
Determining how much life insurance your family needs is a crucial step that can help support a solid financial safety net.
Young parents typically need coverage of five to 10 times their annual income.
Calculating your family's insurance requirements
To determine your ideal coverage amount, follow this simple formula:
- Annual income × number of years you want to replace (typically 10-15 years)
- Plus outstanding mortgage payments (the remaining balance)
- Plus other debts like car loans and credit card balances
- Plus future education costs for your children
- Minus existing savings and investments
For example, if you earn $75,000 annually and want to replace that income for 10 years, plus have $250,000 in mortgage debt and $25,000 in other loans, you'd need approximately $1,025,000 in coverage before accounting for savings.
You can use a life insurance calculator to give you an idea of how much coverage your family needs. Talk to an advisor to find out the precise amount.
Do single parents need life insurance?
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.
Planning for education and future expenses
RESPs are an essential component of your family's financial planning. In 2025, the lifetime contribution limit remains at $50,000 per child, with government grants adding up to $7,200 through the Canada Education Savings Grant. Starting early allows you to maximize these benefits and build a substantial education fund.
Beyond education, consider other future expenses like funeral costs, which average between $5,000 and $25,000 in Canada. Your life insurance can help cover these expenses, helping ensure your family doesn't face financial strain during an already difficult time.
Making life insurance affordable for your family
When starting a family, your budget faces new pressures, but life insurance doesn't have to strain your finances. Term life insurance offers the most affordable protection for young families, with premiums that can be significantly lower when purchased early. Some term insurance policies are convertible to permanent life insurance, giving you peace of mind that you can have temporary coverage now, and the option to have permanent insurance later.
Consider how both parents need protection—even stay-at-home parents provide valuable services that would be costly to replace. New parents who plan early can lock in lower premiums, while helping ensure their growing family has the security they need.
Group benefits
While group benefits through your employer are helpful, if you lose your job, you could lose your benefits. Individual policies typically offer more comprehensive coverage and stay with you regardless of employment changes, providing consistent protection for your family's future.
How parents can get insurance in Canada
Here's a step-by-step guide to help you:
1. Compare different insurance plans
When selecting the right coverage for your family, understanding your options is essential. You can compare the key differences between insurance types to find what best suits your family's needs.
2. Get quick quotations and coverage
Once you've identified the right insurance type for your family, getting a quote is your next step. Sun Life offers simple online tools to help you understand potential costs and coverage options that fit your budget. Get a life insurance quote online.
3. Work with a Sun Life advisor
A Sun Life advisor can guide you through the complexities of insurance planning. You'll receive help to tailor coverage to your family's unique needs and get answers to questions you may have about your situation.
Enter your postal code to find an advisor near you.
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.
