Life insurance can help protect your family financially if the unexpected happens. Here’s what Canadian parents should know about coverage options and costs, and how to choose the right policy.
The day-to-day demands of parenting can easily push big-picture preparation to the bottom of the list. But just as you take immense care in every other aspect of your child’s life, it’s important to make room to plan for the future too. Life insurance is one way to add an extra layer of protection for your kids as your family moves through the different ages and stages of life.
If something unexpected were to happen, a life insurance policy can help to ensure that your family has financial support when they need it most. But many people don’t fully understand their coverage options, or the different types of policies and providers available, so it’s not always obvious where to start.
In this article, we’ll answer some frequently asked questions about life insurance in Canada to help you make the right decision for your family.
What is life insurance?
Life insurance is a financial product that provides a tax-free lump sum payment to beneficiaries if the policyholder passes away while they’re covered.
This is a difficult reality to imagine, but it’s important to know your loved ones would be taken care of. The payout can help in several ways:
- Cover major expenses like a mortgage or rent
- Pay for childcare
- Replace lost income
- Cover daily household costs
- Support major future expenses like education
For parents especially, life insurance offers peace of mind that their children would be financially secure no matter what.
Who needs life insurance?
For anyone who has dependents, life insurance is extremely important. This can include young and growing families, expectant parents preparing to welcome a child, families with shared debt (like a mortgage or other loans) and households that rely on one income.
On the last point, stay-at-home parents should also consider coverage. While they may not earn a salary, replacing the childcare or household support provided by that parent can be expensive.
What’s the difference between term and permanent life insurance?
When exploring life insurance options, you’ll usually encounter two main types: term and permanent life insurance.
Term life insurance provides coverage for a set period (typically 10, 20 or 30 years). It’s designed to safeguard families during the years when monetary responsibilities are usually the highest, such as while raising children or paying down a mortgage.
Term insurance is generally more affordable than permanent insurance, and it focuses primarily on providing protection.
Permanent life insurance lasts for the policyholder’s entire lifetime and may include a savings or investment component. This type of coverage is significantly more expensive than term insurance. Permanent life insurance can also be used as an estate planning device, for those with complex financial needs.
Why is term life insurance often the best option for parents?
For many Canadian parents, especially those with young kids, term life insurance is the most practical and affordable solution. It aligns well with major financial responsibilities, keeps monthly premiums manageable and provides a meaningful safety net.
What should parents look for in a life insurance provider?
There are many different companies to choose from, so it’s important to do your research. Some things to look for include the following:
- Reasonable, transparent pricing
- Flexible term options
- Family-friendly features
Busy families may also want to choose a provider that makes it easy to apply for coverage, without unnecessary steps or complicated processes.
Is there a life insurance option specifically designed with families in mind?
Yes. There are life insurance providers that offer coverage designed with families in mind, with features that make it easier for parents to get protection quickly and affordably.
For example, PolicyMe, Canada’s digital-first insurance platform, offers term life insurance designed with families in mind. Parents can apply online in minutes or speak with a licensed advisor for guidance if they have questions.
Plus, every life insurance policy includes $10,000 of complimentary child coverage for children aged six months to 18 years.
For more on PolicyMe’s family-focused life insurance options, check out policyme.com.
Parenting comes with plenty of unknowns. Choosing the right life insurance policy is one way to bring a little more certainty to your family’s financial future.
