Is the life insurance from my job enough, and what happens to it if I leave?
Group life insurance through an employer is genuinely useful and costs you little or nothing. It is also usually smaller than people assume, commonly one or two times salary, and it normally ends when the job ends. Most conversion rights let you move to an individual policy without medical evidence, but only within a short window after leaving, and often at a higher price than coverage you could have bought yourself. On a $75,000 salary, two times salary is $150,000, which is well short of what a household with a mortgage needs. The conversion window is commonly around 31 days, the amount you can convert may be capped, and nobody chases you if you miss it. Where the employer pays the premium, the Canada Revenue Agency treats it as a taxable benefit on your T4.
What to know at a glance
- Group coverage is normally a multiple of salary, most often one or two times, which is well short of what a household with a mortgage needs.
- The employer owns the contract. They can change the amount or end the plan without your agreement.
- Conversion rights after leaving usually run for around 31 days and do not require medical evidence, but the resulting policy is often expensive.
- Group coverage is best treated as a supplement to personal coverage rather than a replacement for it.
On this page
How long do you need protection?
Start with the need you want your life insurance to cover.
Protection for a defined period. Check the policy’s renewal and conversion options.
Protection designed to last your lifetime, provided the policy stays in force.
Conceptual illustration, not a price comparison or a guarantee of benefits. Policy terms apply. Source: Financial Consumer Agency of Canada.
What group coverage actually is
Your employer buys one contract from an insurer covering all eligible employees. You are a member of that plan, not the owner of a policy. The employer decides the terms, negotiates the renewal, and can change or cancel the whole arrangement.
Joining usually requires no medical questions at all, at least up to a set level. That is the real value: someone with a health history that makes individual coverage difficult may be fully covered under a group plan without being asked a single question.
The two things people get wrong
The differences that matter, side by side:
| Group plan through work | Your own policy | |
|---|---|---|
| Who owns it | Your employer | You |
| How much | Commonly one or two times salary | Whatever you qualify for and choose |
| Health questions | Usually none, up to a set amount | Yes, full underwriting |
| When it ends | When the job ends, often within weeks | When the term ends or you stop paying |
| Price over time | Optional amounts step up in age bands | Locked at the age you buy, for the term |
| Leaving the job | A short conversion window, often about 31 days | It goes with you |
It is smaller than it feels. Most Canadian group plans provide one or two times annual salary. On a $75,000 salary that is $75,000 to $150,000. Set that against a mortgage, replacing income for a decade and raising children, and the shortfall is obvious. Working through how much coverage to consider usually produces a number several times larger.
It is not yours. The coverage exists because of the job. Resign, get laid off, or retire and it generally ends within weeks. That is fine when you leave a job in good health at 32 and pick up new coverage elsewhere. It is a serious problem when you leave at 56 following a health event, which is exactly when replacing it is hardest.
What happens when the job ends
Most group contracts in Canada include a conversion privilege. Within a short window after your coverage ends, commonly around 31 days, you can convert some or all of it to an individual policy with that insurer without providing medical evidence. For someone whose health has changed, that right can be worth a great deal.
Three things to know about it:
The window is short and nobody chases you. Miss it and the right is gone.
The product you convert into is limited to what that insurer offers for conversions, and the price is generally higher than an equivalent policy you could have bought on the open market in good health. It is priced for the fact that only people who need it tend to use it.
The amount you can convert may be capped below your full group coverage.
If you are leaving a job, find out in writing what your conversion right is and when it expires, before your last day. This is the single most commonly forgotten piece of a job change.
The tax wrinkle
Where your employer pays the premium for group term life insurance, the Canada Revenue Agency treats the premium as a taxable benefit to you. It shows up on your T4 and you pay tax on it, which is why a small amount appears in your income that you never received as cash.
The death benefit itself is generally received tax free by the beneficiary, the same as an individual policy. Confirm your own situation with a tax professional rather than relying on a general page.
Optional extra coverage through work
Many plans let you buy additional coverage on top of the basic amount, sometimes called supplemental or optional life. It is worth comparing rather than accepting automatically.
Supplemental group coverage is usually priced in age bands, so the premium steps up every five years, and it still disappears when the job does. Individually underwritten term coverage is locked at the age you bought it and stays with you. For a person in good health, the personal policy frequently costs less over a twenty-year stretch and does more.
For a person whose health makes individual coverage expensive or unavailable, the reverse can be true, and the supplemental group option is genuinely valuable because it asks few or no questions.
The practical approach
Treat the group coverage as a bonus layer sitting on top of a personal policy, not as the foundation.
Own enough personal coverage that losing the job would not leave your family exposed. Keep the group coverage while you have it, because it is cheap or free and it adds to the total. When you leave, check the conversion right before deciding you do not need it.
The failure mode to avoid is reaching 55, changing jobs, and discovering that the only coverage you ever had was the employer’s.
What the answer depends on
Life insurance decisions are made case by case. These are the factors that usually move the outcome:
- What multiple of salary your specific plan provides
- Whether your plan includes a conversion privilege and how long the window is
- Whether you are still insurable individually at your current age and health
- Whether your employer pays the premium, which affects the tax treatment
Related questions
- How much life insurance coverage to consider
- Converting term to permanent
- Life insurance for self-employed and small business owners
- Life insurance in retirement
New to this? What life insurance is and how it works covers the ground this page assumes.
Sources
- Premiums and contributions to insurance plans, Canada Revenue Agency.Supports: Employer-paid group term life insurance premiums are a taxable benefit to the employee in Canada.. Checked August 13, 2026.
- A guide to life insurance, Canadian Life and Health Insurance Association.Supports: The industry association's consumer guide describes term and permanent life insurance, group coverage through an employer and the questions to ask before buying.. Checked September 14, 2026.
Talk it through with a licensed advisor
Reading about how coverage works only gets you so far. What is actually available to you depends on your health, your age and which insurer is looking at your file.
A few questions about you and your health, then a licensed advisor comes back with the options you can actually apply for. No obligation, and a quote is an estimate rather than an offer of coverage.
Send the question you actually have. A licensed advisor replies within one business day. Nothing gets started until you say so.
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