Should You Insure Your Kids? Life Insurance, Critical Illness, and What Actually Makes Sense

Five Ridge Financial | Family Planning | March 27, 2026

By David Cloutier, Co-Founder

The Conversation Nobody Sees Coming

I want you to picture something. You're sitting across from me in a planning meeting. We've gone through your coverage, your savings rate, your RESP contributions. Things are looking good. Then I say, "Have you ever thought about insurance for your kids?"

And you look at me like I just suggested putting snow tires on a bicycle.

I get it. I really do. The whole concept sounds wrong at first. Children don't earn income. They don't have mortgages or dependents. The entire reason life insurance exists is to replace someone's financial contribution to a household, and your seven year old's financial contribution is currently limited to the coins they find under couch cushions.

So why does this keep coming up? Why do carriers build products specifically for children? And why do I bring it up with certain families during reviews?

Because it's not about what a child's life is worth financially today. It's about what you're locking in for their future. And in the case of critical illness coverage, it's about protecting your ability to show up as a parent when it matters most. Once you understand what's actually on the table, the conversation gets a lot more interesting.

Children's Life Insurance: The Quick Version

Let me cover life insurance for children first, because it's where most people's heads go when this topic comes up.

The traditional rationale for life insurance doesn't apply to kids. They don't earn income, so there's nothing to replace. That's the correct starting point, and any honest advisor should say so. But there are three legitimate reasons families consider it.

Guaranteed future insurability is the strongest argument. A whole life policy purchased when your child is two or five years old locks in their ability to get coverage later in life, no matter what happens to their health. If your kid develops a chronic condition, a mental health diagnosis, or an autoimmune disorder during their teenage years, they may struggle to get affordable coverage as an adult. A small policy purchased early guarantees they'll always have a base of coverage, and most carriers allow conversion to larger policies without additional medical underwriting. You're buying them an insurance passport before they even know they'll need one.

Cash value accumulation is real but modest. Whole life policies for children build cash value over decades because the premiums are low and the runway is long. This isn't a replacement for proper investment accounts (the equity portfolio wins on returns, that's just math), but cash value is sheltered, guaranteed, and accessible. Some families use it as a supplementary savings vehicle alongside RESPs, and in that context it plays a different role.

Final expense coverage is the one nobody wants to talk about. Funeral and memorial costs in Canada can run $15,000 or more. A small policy means your family isn't dealing with financial stress on top of the kind of grief no parent should ever have to face.

Two Life Insurance Products to Know

A Child Term Rider (CTR) is an add on to your existing policy. It covers all your children under one rider, and the cost depends on the carrier and the amount of coverage selected. Most CTRs include a conversion privilege that lets each child convert to their own permanent policy (often up to five times the rider amount) at adulthood with no medical underwriting. For a relatively small addition to your existing premium, you're buying them optionality. If you want to compare CTR costs against standalone whole life, we built a CTR vs Whole Life Calculator that lets you run the numbers based on your child's age.

A Standalone Whole Life policy goes in the child's name. Premiums are higher but still modest, and the policy builds cash value from day one and belongs to the child permanently.

Both of these are solid tools. But the product I actually want to spend time on is the one most families don't know about until I bring it up.

Critical Illness Insurance for Children: The One Most People Miss

Here's where I want to shift gears, because this is the part of the conversation that changes everything once you really sit with it.

Life insurance covers the worst case scenario, and that's important. But critical illness insurance covers something that is statistically far more likely to actually happen: your child gets seriously sick and survives.

And here's the question I want you to think about for a second. If your child was diagnosed with cancer, or kidney failure, or needed an organ transplant, how quickly would you want to go back to work?

Not "how quickly could you afford to." How quickly would you want to.

Because the answer for every parent I've ever sat across from is the same. You wouldn't. You'd want to be at the hospital. You'd want to be at home when they got home. You'd want to be wherever your kid needed you to be, for as long as they needed you there.

Critical illness insurance for a child isn't really about the child's finances. It's about yours. It's a tax free lump sum that shows up when your family needs it most, so you can take time off work to be at your child's bedside, cover prescription drugs or specialized treatments not covered by your provincial health plan or your employer's plan, pay for private sector or international medical treatment, handle travel, accommodations, and hospital parking costs, or just keep the household running while your world is focused on your kid's recovery.

That's the reframe that changes this conversation for most families. This isn't abstract financial planning for a child who doesn't earn money. This is protecting your ability to be a parent first when it counts.

Why We Chose Desjardins

Every family's situation is different, and the right product depends on your specific circumstances. What follows is why this particular product made sense for our family after comparing the options available to us. This is not a recommendation for your situation.

When Kristen and I decided to set up coverage for our kids, Chloe and Caleb, I looked at the children's CI products across carriers. We went with Desjardins Health Priorities, Child, 20 Pay, and the reasons were specific.

It offers broad coverage for children. The Health Priorities Child, 20 Pay covers up to 32 illnesses and conditions, including childhood-specific diseases. That's broader coverage than what most carriers offer for children. The exact breakdown of base conditions versus optional add-on conditions can vary, so it's worth reviewing the current product guide with your advisor to understand exactly what's included.

It can include a death benefit. The Child, 20 Pay offers a death benefit rider that provides permanent life insurance coverage alongside the critical illness protection. We added this to our kids' policies, which means each policy provides both CI coverage and a life insurance death benefit. It's worth noting that the death benefit is a rider, so discuss with your advisor whether adding it makes sense for your family's situation.

It's the only CI product in Canada that covers autism spectrum disorder. When I tell families this, I usually have to say it twice. Autism, cystic fibrosis, and Rett syndrome are included as covered childhood diseases. You can also add coverage for Type 1 diabetes, muscular dystrophy, and cerebral palsy. These are the diagnoses that can fundamentally change a family's trajectory, and as of this writing, no other carrier in Canada includes autism in their children's CI coverage.

It includes a return of premiums feature. Here's how this works, and I want to be precise because it's easy to misunderstand. For the Child, 20 Pay product, return of premiums is built into the policy. If you decide to terminate the policy, you can get a percentage of your premiums back. That percentage increases each year until it reaches 100% of what you've paid in. But the key word is "terminate." You're choosing between keeping the coverage or taking your money back. You don't get both. So the way to think about it is this: if something happens, the policy pays out. If nothing happens and you want to keep the coverage for life, you can. And if at some point you decide to walk away from the policy entirely, your premiums come back to you. Whether you claim, keep the coverage, or walk away, the policy is designed so you're not left with nothing to show for your premiums.

It pays advances for less severe conditions. Not everything triggers the full benefit, and it shouldn't. But the policy also provides partial payments for less severe diagnoses. According to the Desjardins product documentation, early stage cancers can trigger an advance of 15% of the coverage amount, minor cardiovascular procedures also pay at 15%, and certain surgical removal events pay at 30%. These advances don't use up the full benefit, so the remaining coverage stays intact for the future.

It comes with extras most people don't expect. The policy includes a second medical opinion service, which is available for any health issue, not just conditions covered by the policy. There's also a Complimentary Assistance Services program that's available to the insured child, their parents, siblings, and even grandparents if they're the policyowners. On top of that, you can add optional riders like an accidental fracture benefit (pays $750 to $5,000 depending on which bone is broken), an accident rider, and a disability waiver of premiums that pauses your payments if you as the policyowner become totally disabled. These aren't the reasons you buy the policy, but they add real practical value.

What We Set Up for Chloe and Caleb

Here's exactly what our family did, because I think it's useful to see how an advisor approaches this for their own kids.

We set up both Chloe and Caleb with $50,000 Health Priorities Child, 20 Pay policies through Desjardins, including the death benefit rider and accidental fracture rider. Here's what that looks like in practice. We pay premiums for 20 years, then the coverage is paid up and theirs for life with no further payments. If either of them is diagnosed with a covered critical illness at any point, the full $50,000 pays out tax free. If the worst happens and one of them passes away, the death benefit pays out. And if we ever decided to terminate the policy, we'd get our premiums back. After the 20 year pay period, there are no more premiums and the coverage stays in force for life. At that point it's theirs. They can keep it as CI protection, keep it for the death benefit, or just know it's there.

The accidental fracture rider means if one of the kids breaks a bone, the policy pays out between $750 and $5,000 depending on which bone it is. With two active kids, that felt like a no brainer. It's not going to change anyone's financial picture, but it's a nice practical touch that could easily cover a trip to the ER and the follow up appointments.

The cost for both kids combined, including the death benefit and accidental fracture riders, works out to right around $1,330 per year as of when we set up the policies. That's roughly $110 a month for two children with $50,000 of permanent critical illness coverage, a death benefit, return of premium feature, accidental fracture coverage, and protection for conditions like autism that no other carrier touches. Current premiums may differ, so check with your advisor for up to date pricing. For the peace of mind and the optionality it creates, that math made sense for our family.

This reflects our family's decision based on our specific circumstances and is not a recommendation for your situation. Product features, pricing, and availability are subject to change. Always review the current product documentation with a licensed advisor.

This Isn't Theoretical: Real Claims on Children's CI

One thing that grounds this conversation is seeing what these policies actually pay out in real life. According to Desjardins Insurance claims data, the company has paid out over $104 million in critical illness benefits. Here are some examples of actual claims paid on children's policies, as reported by Desjardins.

A child diagnosed at birth with paralysis received $25,000. Another infant diagnosed with bacterial meningitis received $50,000. A three year old diagnosed with kidney cancer received $25,000. A three year old diagnosed with autism spectrum disorder received $50,000. A six year old diagnosed with kidney failure received $25,000. A twelve year old diagnosed with leukemia received $25,000. A fifteen year old diagnosed with Type 1 diabetes received $25,000. A sixteen year old who needed a major organ transplant received $100,000.

These are families who had coverage in place before they knew they'd need it. Every one of those payouts was a tax free lump sum that arrived when the family was dealing with something no parent should have to face. That's what this product actually does in the real world.

A Few Things to Know Before You Sign Anything

I want to be upfront about how the claims process works, because understanding this is part of making an informed decision.

A doctor's diagnosis alone doesn't automatically trigger a benefit payment. The condition has to meet the specific definition in the contract, and for some illnesses, only severe cases qualify. There are also moratorium periods: most cancers and early stage conditions have a 90 day moratorium from the policy start date, and Parkinson's has a 12 month moratorium. Some conditions also have qualifying periods where symptoms or functional losses must persist for a set number of days before the benefit is payable. For example, stroke has a 30 day qualifying period, coma has a 96 hour period, and bacterial meningitis has a 90 day period.

There's also a 2 year contestability period on all policies, which means the carrier may request additional documentation if a claim happens in the first two years.

None of this is unusual for CI products. It's standard across the industry. But it's the kind of detail your advisor should walk you through clearly before you commit to anything.

The Decision Framework

Children's insurance, whether life or critical illness, makes sense when your family has already covered the basics. Your own coverage is solid. Your RESP contributions are on track. You're not carrying high interest debt. You've got margin in the budget. And you want to do something thoughtful for your child's future, especially if there's a family history of health conditions that could complicate things down the road.

It does not make sense if you're stretching to afford it. If adding premiums for your children means reducing your own coverage or skipping an RESP contribution, the math doesn't work. Your coverage comes first. Your retirement savings come first. Your child's education savings come first. This is a "once the foundation is solid" conversation, not a "let's start here" conversation.

So, Should You?

Children's insurance is not essential for most families. Full stop. But for families who are in a stable position and want to think ahead, it's one of the most thoughtful things you can do.

A children's CI policy through Desjardins can give you critical illness coverage, a death benefit, a return of premium feature, and coverage for conditions like autism that you cannot get from other carriers in Canada as of this writing. It protects your child's future insurability. And most importantly, it protects your ability to stop working and be present if your child gets seriously sick.

My wife and I looked at the options, ran the numbers, and decided it made sense for our family. That doesn't mean it's right for yours. But it's worth having the conversation honestly, with real numbers in front of you, and making the call from there.

If you want to see the numbers laid out, we built a CTR vs Whole Life Calculator that lets you compare life insurance costs and projected cash values based on your child's age. And for the full breakdown, including carrier comparisons and conversion limit details, check out our complete Children's Insurance guide.

This article is educational in nature and does not constitute personalized financial advice. Insurance products, features, and pricing referenced in this article are based on information available as of the publication date and are subject to change. Insurance needs vary by family. Speak with a licensed advisor to determine what is appropriate for your situation.

Five Ridge Financial Ltd. | www.fiveridgefinancial.com