Should you buy life insurance for a child? Both sides

First, the question behind the question

Most people who ask "should I buy life insurance for my child" are really asking one of two different things. The first is: "is this a smart way to protect or grow money for my child?" The second is: "what if my child can't get insured later?" These have different answers, and conflating them is why the debate gets so heated. Keep them separate as you read, and the decision gets much clearer.

One thing both camps agree on: this is never the first priority. Before a child policy comes into the picture, the foundations should be in place — adequate life insurance on the income-earning parents, an emergency fund, and a funded RESP to capture the education grants. A child policy is a later-stage decision, not a starting one.

The skeptic case (steelmanned)

The case against is strong, and it deserves to be made at full force rather than dismissed:

• A child has no income to replace. Life insurance exists to protect people who depend on someone's earnings. No one depends on a child financially, so the central purpose of insurance simply doesn't apply. A policy on a child solves a problem that, in the ordinary case, doesn't exist.
• As an investment, it usually loses. If you took the same monthly premium and put it in an RESP, you'd collect government grant money a policy can't offer. Put it in a TFSA or a low-cost index portfolio and, over 18 years, the expected growth typically exceeds a policy's cash value — because you're not also paying for insurance and acquisition costs.
• The insurability risk is usually small. Most children grow into healthy adults who can buy their own coverage on standard terms. You're paying, for years, to hedge an outcome that for most families never arrives.
• Low early cash value and long commitment. Surrender in the early years and you may get back little to nothing. The product only rewards families who hold it for decades.
• Emotion can be exploited. Marketing that leans on a parent's fear or guilt is a reason to be more skeptical, not less. "Invest the difference" is the rational default.

Taken together, the skeptic's conclusion is reasonable: for the typical family, the money is better invested, and a child policy is optional at best.

The case for buying it (steelmanned)

The case in favour is narrower but genuine, and it isn't only an emotional one:

• It locks in future insurability. This is the strongest argument. A small percentage of children develop conditions — diagnosed in childhood or early adulthood — that make life insurance expensive, restricted, or unavailable later. A policy with a guaranteed insurability option lets the child add coverage as an adult without new medical underwriting. If your family has a history of insurability-affecting conditions, that hedge has real value.
• Tax-sheltered, permanent cash value. A participating whole life policy accumulates cash value that grows without annual taxation and a benefit that's generally tax-free. For high-income families who have already maxed registered accounts, it's a legitimate additional tax-sheltered vehicle. (Tax treatment depends on your circumstances and can change — confirm with a tax advisor.)
• Premiums are locked in young. Pricing reflects the child's age and health at issue, so the long-run cost per dollar of permanent coverage is about as low as it gets.
• Forced, disciplined saving. For families who know themselves to be inconsistent investors, a permanent policy turns "I'll invest the difference" — which many people never actually do — into an automatic, decades-long commitment.
• Final-expense certainty. In the rare worst case, a small benefit covers funeral costs without a grieving family having to crowdfund. It's not a financial argument so much as a peace-of-mind one, and for some families that's worth a modest premium.

A clear buy-if / skip-if framework

With both cases on the table, here's a practical way to land the decision. Be honest with yourself about which list you fall into.

Consider buying if most of these are true:

• Your own life insurance, emergency fund, and the child's RESP are already in place.
• You specifically value guaranteed future insurability — for example, there's a family history of conditions that affect underwriting.
• You have maxed your registered accounts and want an additional tax-sheltered, permanent vehicle.
• You know you're an inconsistent saver and want a forced, automatic commitment.
• You're confident you'll hold the policy for the long term, not surrender it in a few years.

Consider skipping (or waiting) if most of these are true:

• Your main goal is simply to grow money for the child — an RESP or investment account will likely do more.
• Money is tight and the premium would compete with the foundations above.
• The child is healthy with no family-history concerns, so you could let them buy their own coverage as an adult.
• You're feeling pressured or rushed, rather than making a considered choice.
• You're not confident you'd keep the policy for many years.

If you land in the middle, a low-cost middle path exists: a child term rider on a parent's policy gives a modest amount of coverage and a future conversion option for a few dollars a month, without committing to a large permanent contract. It captures part of the insurability benefit at a fraction of the cost.

How to decide well, whichever way you lean

Whatever you choose, decide on the merits, not on a sales pitch. If you're leaning toward buying, ask a licensed broker to show you the policy's break-even year, its guaranteed versus non-guaranteed cash value, and exactly how the insurability option works. Compare that, in plain numbers, against simply investing the premium. A good broker will walk you through both and won't pressure you. For the product mechanics, our child insurance overview and whole life guide cover the details, and you can compare options across the full marketplace.