When it comes to life insurance, many Canadians feel covered simply because they have a policy through work. And while group life insurance is a valuable workplace benefit, it’s often misunderstood and, in many cases, not enough on its own.
If you’re relying solely on your employer’s plan, it’s worth taking a closer look at how group life insurance compares to private coverage, and what that could mean for your long-term peace of mind.
The Basics of Group Life Insurance
Group life insurance is typically offered by employers as part of a benefits package. It’s usually a flat amount or based on a multiple of your salary (such as 1x or 2x your annual income). This coverage is convenient, low-cost (or even free), and requires little to no medical underwriting.
But while that sounds ideal, it also comes with limitations – especially if you’re thinking about long-term protection or coverage for your family.
Portability: What Happens If You Leave Your Job?
One of the biggest drawbacks of group coverage is that it’s tied to your employment. If you change jobs, get laid off, retire, or move to part-time status, your life insurance likely ends or drops significantly. Some plans offer a conversion to an individual policy, but the rates are often higher and may require health screening.
In contrast, private life insurance stays with you no matter where you work. You choose the policy, the amount, and the structure. It’s a long-term solution designed to support your family beyond your current job.
Is Group (Employer-Provided) Coverage Enough?
Many group plans offer limited coverage, often $25,000 to $100,000, which may help with immediate expenses but isn’t usually enough to cover long-term needs like:
- Paying off a mortgage
- Replacing income for dependents
- Funding education for children
- Covering final expenses and debt
A private life insurance policy can be tailored to your financial situation, offering enough coverage to safeguard your loved ones well into the future.
Flexibility and Customization
Group policies are one-size-fits-all. You don’t get to choose the coverage amount, term length, or structure – and you may not be able to add riders (like critical illness or disability benefits). Private policies offer full customization based on your age, health, goals, and budget.
Cost Considerations
Group insurance is often inexpensive because it’s shared across a pool of employees, but that doesn’t always mean it’s the most cost-effective. Younger or healthier individuals may find that private term life insurance offers more coverage at a better rate – especially if you lock in early.
And while private plans require more effort up front (like medical questionnaires), that extra step gives you better control and more accurate pricing.
Do You Need Both?
In many cases, yes. Group life insurance can be a great foundation – it’s affordable, automatic, and offers some level of protection. But for true peace of mind, a private policy ensures you’re not leaving your family underinsured, especially if life changes suddenly.
Having both can provide layered protection, giving you short-term coverage through work and long-term, tailored protection through a private plan.
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Life insurance through work is a great perk, but it often isn’t designed to stand alone. If you’re counting on it to support your family, now’s the time to explore whether private coverage can fill the gaps and offer lasting security – no matter where life takes you.
Let’s talk about the right life insurance plan for your future.
Our team can help you review your current coverage and explore affordable options that fit your life, your family, and your goals. Contact our team today to get started on a personalized quote.
