Many employer benefits plans include group life insurance. It costs you little or nothing and usually needs no medical evidence up to the plan’s limit, but it is often less than a family needs, and it belongs to the job rather than to you. This page covers how group coverage works; it is part of the life insurance guides.
How employer group life insurance works
| Feature | Detail |
|---|---|
| Basic coverage | A multiple of earnings (such as 1× or 2× salary) or a flat amount per employee class; often employer-paid |
| Optional life | Employee-elected extra coverage; employee-paid via payroll |
| Dependant life | Coverage on a spouse and children; amounts set by the plan |
| AD&D | Accidental death and dismemberment; often offered alongside group life; pays extra for accidents |
| Premium payer | Basic = employer; supplemental = employee deduction |
| Underwriting | No evidence of health up to the plan’s “non-evidence maximum” (NEM); evidence of insurability required above it |
| Coverage end date | When employment ends (the exact date is plan-specific) |
Is group coverage enough?
An $80,000 earner with 2× coverage has $160,000 of group life insurance. A household with a mortgage, children and a single main income often needs more than that once debts, income replacement and education are added up. Working out how much coverage you need shows the DIME calculation, including how to subtract group coverage from the total. Whatever is left is the gap an individual policy would fill.
Group life vs individual term life
| Feature | Group life | Individual term life |
|---|---|---|
| Cost to you | Often nothing for basic coverage (employer-paid, but a taxable benefit) | You pay the premium |
| Amount | Set by the plan (a salary multiple or flat amount) | You choose |
| Portability | Ends when you leave the job (conversion or portability may be available) | Stays in force whatever job you have |
| Underwriting | None up to the non-evidence maximum | Health questions, sometimes an exam |
What individual term coverage costs is covered in life insurance costs by age.
Group coverage is a useful free layer. Many employees combine it with a personal term life policy so that most of their coverage doesn’t depend on keeping a particular job.
Naming a beneficiary
| Scenario | What happens |
|---|---|
| Named beneficiary on file with the insurer | Pays directly to the beneficiary, bypassing probate; usually faster |
| No beneficiary on file | Pays to the estate; goes through probate; exposed to creditor claims |
| Outdated beneficiary (ex-spouse still named) | May pay to the wrong person: the insurer follows the designation on file |
| Minor child named directly | A minor can’t manage the money; unless a trustee is named, it is held for the child until the age of majority |
A common setup names a spouse or partner as primary beneficiary and adult children or another trusted person as contingent. Where money is meant for minor children, naming a trustee to manage the funds until the children reach adulthood avoids the money being held under provincial rules. Insurance trusts and irrevocable designations are covered in life insurance in estate planning.
Taxable benefit rules
| Situation | T4 treatment |
|---|---|
| Employer pays group term life premiums | Taxable benefit, reported with code 40 on the T4 |
| Employer pays AD&D (group accident) premiums | Taxable benefit (CRA treats employer-paid group sickness or accident premiums as taxable unless they are for a wage-loss replacement plan) |
| Employer pays private health services plan premiums | Not taxable federally; Quebec treats the employer’s contributions as a taxable benefit for provincial tax |
| Employee pays their own optional life | No taxable benefit; payroll deduction from after-tax income |
| Employer pays for individual life insurance for employee | Taxable benefit |
How the taxable amount is calculated is set out in is group life insurance taxable in Canada.
When you leave: conversion and portability
Coverage ends with employment. When you resign, are laid off or retire, group life insurance ends on a date set by the plan, and the conversion window starts. If a health condition developed while you were employed, you may not qualify for individual coverage at standard rates, or at all.
| Feature | Details |
|---|---|
| Window to convert | Short and fixed (31 days after coverage ends at Canada Life, for example); confirm with your plan administrator |
| Type of policy available | An individual conversion policy set by the insurer |
| Medical evidence required | No |
| Coverage amount | Up to your previous group amount, and some insurers set a lower dollar cap |
| Premium | Individual rates, likely higher than what you paid under the group plan |
| Age limit | Some plans don’t allow conversion once coverage ends at an older age (65 at Canada Life) |
| Most useful for | Employees with health conditions that may limit individual coverage |
| After the window closes | Conversion right is lost |
Portability is a different option: some plans let you keep coverage going after you leave instead of converting it to an individual policy. The plan booklet says whether it is offered and on what terms.
If you are healthy, a new, fully underwritten individual policy may cost less than converted coverage; the usual sequence is to have it approved before your last day. If you are not, conversion or a no-medical policy such as those from Canada Protection Plan may be the only options. Group disability coverage ends at the same time; see disability insurance for the individual alternatives.
Life events and enrolment
| Life event | What to update |
|---|---|
| Marriage / new common-law partner | Add spouse to dependant life; update beneficiary |
| Birth or adoption of child | Add dependant life for the child; review total coverage; update beneficiary |
| Divorce or separation | Remove ex-spouse as beneficiary |
| Salary increase | Check whether basic coverage adjusts automatically (earnings-based plans rise with salary) |
| Leaving job | Note the conversion window; arrange individual coverage; update all beneficiaries |
Frequently asked questions
Does employer life insurance cover death by suicide? It depends on the plan. Individual policies commonly exclude suicide in the first two years (PolicyMe’s term policy, for example, refunds premiums instead of paying the death benefit in that period). Group plans set their own terms, so the plan booklet or plan administrator is the place to confirm whether any exclusion applies and for how long.
Related articles
Sources
The figures and rules on this page come from these sources, last checked against them on September 25, 2026. How we check facts.
- Canada Life: Workplace life insurance - Conversion fact sheet - 79-00835
- Canada Revenue Agency: Premiums and contributions to insurance plans