Insurance for a Newborn Baby: Anthony and Melissa's story

Do we need insurance for the baby?

Sitting at the kitchen table, Anthony and Melissa wonder if they should take out insurance for their newborn. After all, it’s better to be safe than sorry.

While doing their research, they come across a statistic that gives them pause. In Canada, in 2024, nearly 5 out of 1,000 children died before their first birthday (This hyperlink will open in a new tab), almost the same rate as people aged 55 to 59 (4.8%).

This could be one good reason to take out insurance for their child.

Do we need insurance for the family?

Anthony and Melissa decide to a look at their own situation. They’re 30 years old. They work full-time and have a comfortable financial situation. However, like many young couples, neither of them has individual life insurance.

They’re in good health and have no underlying medical history. However, Melissa is going through gestational diabetes. Could this be hiding more serious health problems?

That’s when they realize that before thinking about insuring their child, they should probably protect their own financial situation.

After all, they’re the ones who pay the bills and who will be caring for the child. If one of them were to die or fall seriously ill, the other would have to bear the financial burden. The consequences would affect the entire family.

So, who to insure first?

Anthony and Melissa's first thought was to protect their future child. However, based on their research, they realize that taking care of others means taking care of ourselves first. It's like being on a plane. In the event of a problem, parents are advised to put their oxygen mask on first before helping their child with theirs. This analogy allows them to set three priorities.

1. Life insurance for them

Anthony and Melissa should focus on their needs first. Their family’s financial security depends on it. They decide to learn about life insurance.

They see that term life insurance could be a good option. Their financial needs will grow as their children require more care. This coverage could help the surviving parent pay for expenses and maintain financial stability.

Future parents can even add coverage for their child to their policy, knocking two birds with one stone.

They also ask about permanent life insurance, which provides lifetime coverage rather than for a specific period.

2. Critical illness insurance for parents and children

Then, Anthony and Melissa turn their attention to the financial consequences of an illness. They check out critical illness insurance. In the event of a covered illness diagnosis, the insurance pays a lump-sum amount of up to $250,000 to the beneficiary who can use the money as they see fit.

In the event that their child became seriously ill or underwent a covered surgery, the amount paid would allow them to pay for unforeseen expenses.

This insurance also provides access to support services like:

• A second medical opinion
• Admission during hospitalization
• Psychological support

They could also combine critical illness insurance with permanent, universal or term life insurance.

3. Life insurance for their child

Finally, once their needs are taken care of, Anthony and Melissa might consider life insurance for their child.

The younger the child is when the coverage is taken out, the lower the premium.

What’s the best decision?

After all this research, Anthony and Melissa realize that there is no one-size-fits-all solution. Every family has its own situation, budget and priorities. They therefore decide to consult a financial security advisor for recommendations tailored to them.