What is the best life insurance for young parents?

This article was originally published on October 21, 2019 and was updated on November 21, 2025.

Welcoming a new baby changes everything, including your work schedule, social circle, and your budget. Buying a home and starting a family are two of the biggest reasons Canadians shop for family life insurance. While it can feel like something you can put off until you’re older, getting life insurance coverage while you’re young and healthy is usually easier and cheaper.

According to a recent study from PolicyMe, about 42% of Canadians don’t have life insurance or aren’t sure if they do, and one in four aren’t confident their families would be financially secure if they passed away. Similarly, a survey from BlueCross reveals that half of Canadians would not be able to maintain their lifestyle if their household’s primary earner passed away. This gap in coverage leaves a lot of families exposed if the main earner were to die unexpectedly. 

Let’s explore which type of life insurance is best for young parents and how to determine how much coverage you need. 

Who is insured and who benefits?

The first thing to clarify when shopping for family life policies is who will be insured by the policy and who will be the beneficiary. This isn’t complicated, but it’s essential to think about.

The “life insured”:

This is the person whose life is covered by the policy. For family policies, this will generally be you and/or your partner, if you have one. If you have a partner but only one of you is earning a salary, you might want different levels of coverage. The working parent’s policy needs to cover the loss of their salary, while the loss of a stay-at-home parent — while equally devastating — may have a lower financial impact. There’s also the option of insuring your child.

The “beneficiary”:

The beneficiary is the person who receives the payout. If you’re a single parent, your child will likely be the beneficiary, but the money will usually be placed in a trust until they’re an adult. If you have a partner, they’ll typically be the beneficiary, but you can also list your partner and child as co-beneficiaries.

To determine which policy type is right for you, think about what you want the coverage to do. Who will benefit from the payout, and what should it cover? Many young parents use their death benefit to replace income, pay off a mortgage, cover childcare or daily expenses, or set aside funds for their child’s education. 

You’ll also want to consider how long you’ll need that protection — for example, until your kids are adults, or until the mortgage is paid off. Figuring out these details helps you see the bigger picture when setting up your financial plan and ensures your life insurance actually supports your family’s needs.

How much life insurance coverage do new parents need?

To calculate how much life insurance you need, start with the DIME method. This adds up your debts, income replacement (how many years you want to replace), mortgage balance, and education costs. Then ensure your policy covers it all, and more.  

You could also add up your needs manually by calculating your financial obligations. Lastly, you could select a coverage amount equal to 10x your annual income, though this approach is somewhat arbitrary. A better method would be to estimate your total salary until you retire, which will ensure your family remains financially comfortable. 

Don’t forget to add childcare for younger kids, especially if the surviving parent would need paid help to keep working. You should also factor in day-to-day expenses for at least six months to two years while your family adjusts.

What types of life insurance policies should parents consider?

There’s no shortage of life insurance options for families in Canada. Each type offers different coverage, costs, and flexibility, so it helps to understand how they work before comparing quotes.

Term life insurance (often the best fit for families)

With term life insurance, you choose a coverage amount and a term duration (usually 10, 20, or 30 years). If you pass away during the term, your beneficiary receives a tax-free death benefit. Term life insurance premiums are typically lower than those for permanent insurance, so you can buy more coverage for the years you need it most — typically until kids are grown, and major debts are paid down. 

Whole life insurance (a type of permanent life insurance)

Whole life insurance coverage lasts for life and includes a cash-value component that can grow over time. Premiums are typically higher, which is why many young families prioritize term coverage first, and consider permanent life insurance later for estate planning or lifelong needs.

Joint coverage options for couples

There are two main options when it comes to joint life insurance policies:

• Joint first-to-die: This type of coverage pays out a death benefit when one person on the policy passes away. Once the benefit is paid, coverage ends. It’s often cheaper than buying two separate policies and can include an option for the surviving partner to continue coverage.
  
  
• Joint last-to-die: This type of policy pays a death benefit only when both people on the policy pass away. Coverage continues after the first partner passes away, as long as the surviving policyholder continues paying premiums.

While life joint insurance policies can be cost-effective, they also come with limitations to consider before buying a policy. 

Also read: What is joint life insurance for couples in Canada

Life insurance for children (optional)

Some parents add a small child rider to their policy or buy a permanent policy to lock in lifetime insurability. It’s not essential for everyone, but it can be part of a broader family plan.

How much does life insurance cost for parents?

The cost of life insurance depends on many factors, including age, health, smoking status, coverage amount, and term length. Term life insurance is usually much cheaper than permanent coverage because the payout isn’t guaranteed during the term, making it budget-friendly for most families.

Using the Ratehub life insurance calculator, here are a few examples of what a policy might cost for policyholders in Ontario:

A whole life insurance policy with similar coverage can cost 10–15X as much as term insurance, often several hundred dollars more per month.

These examples show how term life insurance offers strong coverage for a much lower cost, making it an ideal option for healthy young parents who buy early.

What’s the best life insurance policy for parents?

There isn’t one best policy, but for most young families, term life insurance strikes the right balance between affordability and protection. It provides coverage when you need it most, like when your kids are growing up, childcare costs are high, and mortgage payments are still at their peak.

If you have a partner, a joint first-to-die policy could offer a cost-effective way to protect both of you. And if you’re a higher earner or looking to build wealth for the long term, a whole life insurance policy could provide both protection and an investment element.

The key is matching your policy to your goals and coverage needs rather than just picking the cheapest premium.

Why buy life insurance coverage sooner rather than later?

Beyond the financial peace of mind, families with life insurance coverage can feel more secure and less stressed about the future. In fact, 89% of Canadians say life insurance supports their mental well-being. This is a big win during the busy, sleep-deprived early years of parenting. 

Not to mention, the younger and healthier you are when you apply for coverage, the lower your premiums will likely be. Prices for life insurance increase by an average of 8% each year you get older, meaning the longer you delay coverage, the more you’ll pay in premiums. Securing coverage now at a lower rate will help you lock in affordable premiums for the duration of your policy. 

Also read: Do you need life insurance under 35?

The bottom line

Family life insurance is one way parents can proactively protect their family from the financial hardships that come with the loss of a parent. Selecting a policy is pretty straightforward. You start by deciding who you’re protecting, what the death benefit should cover (housing, childcare, daily bills, education), and how long you’ll need it.

For many young parents, a 20 or 30-year term policy is a practical place to start. Compare life insurance quotes today to get personalized rates, and remember that getting covered now while you’re young and healthy can lock in lower premiums and provide lasting peace of mind.

Also read:

• Life insurance in Canada: Why you should buy a policy in 2025
• Why aren’t more millennials and Gen Z buying life insurance?
• Life insurance for young married couples
• How to update a life insurance policy after major life events