Life Insurance for Parents: Why Coverage Matters for Your Family
See affordable life insurance quotes from PolicyMe and other top companies.
Do parents need life insurance?
Parents—including single parents and stay-at-home parents—need life insurance to protect their children’s financial future and ensure that debts and other obligations are covered if they pass away.
Generally speaking, term life insurance is the best choice for most parents—and it’s a good idea for each parent to have coverage. If you pass away during the term, your surviving spouse and/or children would receive a tax-free, lump-sum payout to help cover their expenses and ensure your family’s stability during a difficult time.
Life insurance can be used to cover things like:
- Mortgage or rent payments
- Education costs
- Daily living expenses
- Medical expenses
- Your funeral expenses
PolicyMe’s term insurance for adults includes $10,000 of free child coverage. In most cases, kids don’t need their own life insurance policy.
Types of life insurance for parents
There are two main types of life insurance for parents: term and permanent. Both provide payouts to your family members if you pass away, but that’s where the similarities end.
When you’re comparing term vs. permanent coverage, you might think that lifelong coverage sounds like the best way to take care of your family. But ultimately, a term life insurance policy is usually the best choice for parents. Here’s why:
- It’s affordable. Term premiums are the most affordable option—and the earlier you secure coverage, the lower your premiums will be. Use the extra money in your budget to invest in higher-return investment vehicles, like RESPs or RRSPs.
- It’s flexible. You can choose the term that works best for your financial situation. You can also ladder policies with different term lengths to better match your family's needs.
- It’s easy to manage. With fixed premiums and a set coverage period, term life insurance is as close to “set it and forget it” as you can get.
“If they're a young family and they want to be responsible and look after their kids, term insurance is the way to go. It's going to get you the most coverage and the biggest bang for your buck. Once your kids are all grown up and independent, you don't need to worry about insurance anymore.” —Erik Heidebrecht, Life Insurance Advisor
How much life insurance coverage do parents need?
Parents need enough life insurance coverage to protect their family’s financial security. The exact number for financial support depends on your family’s situation. The general guidelines are:
- Working parent: At least 5–10x the annual gross income to replace lost income, pay off debts, and fund future expenses (like education)
- Stay-at-home parent: Generally $250,000 to $500,000 to cover childcare, household management, and other essential expenses
You can use the DIME method to estimate the right amount for your family:
- Debts
- Income replacement (annual salary)
- Mortgage
- Educational expenses
Add up all your financial obligations or use a free life insurance calculator and you’ll get a sum that represents the approximate amount of life insurance you need as a parent. But remember, this is an estimate so make sure to assess whether it’s enough for your family’s needs (and your own funeral costs).
Read more: How much life insurance do I need?
While group life insurance can be helpful, you likely need additional coverage. Employer-sponsored policies have limitations and only provide about 1–2x your salary in coverage. Plus, the insurance coverage will end if you leave the company.
How much does life insurance for parents cost?
The average cost of life insurance varies depending on your age, health status, term length, and coverage amount. Here are some sample rates for individual policies for non-smoking women:
And here are sample rates for non-smoking men:
Remember, rates vary person by person, and your premium might be higher if you are deemed higher risk because you:
- Smoke
- Engage in high-risk hobbies
- Have a high-risk profession
- Have pre-existing health issues
Parents can save 10% off the first year of coverage with PolicyMe by applying together for two individual policies (rather than one joint one).
Best life insurance companies for parents
Based on affordability and coverage options, the best life insurance companies for parents in Canada include PolicyMe, Sun Life, Manulife, and RBC. Here’s how they stack up against each other:
PolicyMe is a good provider for parents who want affordable policies with free child coverage. The online application process is simple and the 10% first-year discount for when applying as a couple is an added bonus.
Parents who are interested in more bells and whistles may wish to consider Sun Life, Manulife, or RBC. These are established companies with more perks and features, but you can expect to pay higher premiums.
FAQ: life insurance for parents
Bonnie Stinson is an insurance writer and researcher in Toronto with a decade of experience producing helpful, accurate content for Canadians. They have published resources for some of Canada's most innovative and consumer-trusted companies in the health, legal, and fintech sectors.
Bonnie Stinson is an insurance writer and researcher in Toronto with a decade of experience producing helpful, accurate content for Canadians. They have published resources for some of Canada's most innovative and consumer-trusted companies in the health, legal, and fintech sectors.