Group vs. Individual Life Insurance in Canada: Don't Rely on Just One
If your employer offers group life insurance as a benefit, it's tempting to think you're covered. For most Canadians, you're not — at least not adequately. Here's the gap and how to close it.
What group life insurance is
Group life is a single master policy your employer holds. You're covered as long as you work there, usually for 1-2 times your annual salary, sometimes more. It's often free or paid for through a small payroll deduction. You don't have to medically qualify.
Why it's not enough on its own
- Coverage is small. One year of salary is rarely enough to support dependents for the years they'd need it.
- It ends when employment ends. Quit, get laid off, retire, or get fired? Coverage usually terminates within a month or two.
- You don't control it. Your employer can change carriers, reduce benefits, or modify the plan without your input.
- Limited conversion. When group coverage ends, you sometimes get a short window to convert to an individual policy at standard rates, but coverage amounts and pricing are usually worse than what you'd get on the open market.
What individual life insurance gives you
- You own it. The policy is in your name, with your beneficiaries. It doesn't depend on your job.
- You choose the coverage amount. Match it to your actual needs.
- Premiums are locked. Your rate doesn't change because you switched jobs or got older.
- Portability. Move to a new employer, retire, work for yourself — the policy stays.
How the two work together
Treat group life as a small bonus on top of an individual policy. The individual policy is your foundation; the group coverage is a supplement that doubles your protection while you're employed.
If your group plan offers optional voluntary coverage on top of the base amount, the rates are sometimes good (especially for healthy young employees), but they're often locked to the employer's group. Compare against what you'd pay individually before signing up for the maximum.
The smart move
Buy an individual term policy that covers your real income-replacement need (10× salary is a rough guide). Take whatever the employer provides as a bonus. Don't rely on the group plan to be enough — it almost never is.
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