Work Life Insurance Isn't Enough: Here's Why

Your benefits booklet says you are covered for two times your salary. That sounds like a real number. So here is the question worth asking before you file it away: if you left that job next month, how much of that coverage would walk out the door with you?

For most people in Burnaby and across Metro Vancouver, the honest answer is none of it. That is not a knock on group benefits. It is simply how the contract is built.

Your employer owns the policy, you are just covered by it

Under Part 3 of British Columbia's Insurance Act, group insurance is defined as insurance "under which the lives of a number of persons are insured severally under a single contract between an insurer and an employer or other person."

Read that last part again. The contract is between the insurer and your employer. You are what the Act calls the "group life insured," a person covered under somebody else's agreement.

You do get real protections. Section 70 says a group life insured may "in their own name enforce a right given to the group life insured under a contract, subject to any defence available to the insurer." Section 43 requires the policy to disclose "any provision removing or restricting the right of a group life insured to designate persons to whom or for whose benefit insurance money is to be payable," which is a formal way of saying some group plans limit who you can name as a beneficiary.

What you cannot do is stop your employer from switching insurers, trimming the benefit, or ending the plan. The coverage belongs to the job, not to you.

What the national numbers actually show

The Canadian Life and Health Insurance Association publishes an annual data book. In Canadian Life & Health Insurance Facts, 2025 Edition, the CLHIA reports that 23 million Canadians own $6 trillion in life insurance coverage. Group term life made up 34 per cent of the value of policies in force in 2024, down from 41 per cent in 2014. Individual life insurance now accounts for 66 per cent, up from 59 per cent a decade earlier, growth the report attributes mainly to term life.

The premium split runs the other way. The same report says most life insurance, 83 per cent of it, is purchased by individuals through an agent or advisor, out of $29.6 billion in life insurance premiums in 2024. Group plans are a big slice of the coverage in force and a small slice of what Canadians actually spend on protection.

Then there is the size question. The CLHIA puts average protection per household in Canada at $509,000, up from $483,000 in 2023, which it notes approximates five times household income. For British Columbia specifically, average protection per insured household is $541,000, with a median age of 41.

Set that against a typical group benefit of one or two times salary. If you earn $85,000 in Coquitlam and your plan pays two times salary, that is $170,000. It is not nothing. It is also a long way from five times household income, and a long way from a Metro Vancouver mortgage balance.

Where a work-only plan tends to break

• You change jobs. Statistics Canada reports that average job tenure across all industries declined from 103.2 months in 2014 to 100.3 months in 2024, a shade over eight years. That average hides plenty of people who move every two or three.
• Your health can change in the gap. Group coverage usually skips the medical questions. A personal policy does not. If a diagnosis arrives while you are between plans, your options and your pricing can look very different than they would have looked a year earlier.
• The amount is a formula, not a plan. Two times salary is set by the plan design. It has no idea what your mortgage is, how many kids you have, or how long your partner would need income.
• It often shrinks or stops at retirement. Many group plans reduce or end coverage at a set age, which is frequently the point when final expenses and estate taxes come into view.
• The plan can change without you. Your employer renegotiates, merges, downsizes, or drops the benefit, and your coverage moves with their decision.
• Beneficiary choice may be restricted. As the BC Insurance Act acknowledges in section 43, some group contracts limit who you can name.

It is not entirely free, either

Employer-paid group life shows up on your tax return. Subsection 6(4) of the Income Tax Act says that "where at any time in a taxation year a taxpayer's life is insured under a group term life insurance policy, there shall be included in computing the taxpayer's income for the year from an office or employment the amount, if any, prescribed for the year in respect of the insurance."

That is usually a modest amount on a T4, not a budget item. But it is worth knowing that "free" workplace life insurance is a taxable benefit, while the death benefit paid to your beneficiary is a separate question you should confirm with a tax professional for your own situation.

What group benefits are genuinely good at

This is not an argument for cancelling anything. Group plans do some things better than any personal policy can.

The CLHIA reports that 91 per cent of health insurance in Canada is purchased through a group plan, on $65.9 billion in 2024 health premiums, and that insurers paid $10 billion in disability benefits in 2024, helping 12 million Canadians replace wages while they could not work. Group drug, dental, and paramedical coverage is hard to replicate individually at the same cost. Part 4 of the Insurance Act gives group members covered for accident and sickness similar rights to enforce their coverage directly.

Group life also gets you in without a medical exam, which matters a great deal if your health history would make personal coverage harder to arrange.

The sensible approach for most families is layering. Keep the group coverage. Own a personal policy underneath it that stays with you regardless of who signs your paycheque.

What this doesn't tell you

Honest caveats, because the evidence has limits.

• The CLHIA is an industry association. Its data is the best national picture available on coverage in force, and it is also published by the sector it describes.
• Averages are not needs. A $509,000 national average says nothing about whether your family needs more or less. A single renter in New Westminster and a couple with two kids and a mortgage land in completely different places.
• Group contracts vary enormously. Conversion privileges, portability options, waiver of premium, and reduction schedules are written into each individual contract. Your benefits booklet is the authority, not any article.
• Job tenure averages hide the spread. Eight years is the mean, not your likely experience.
• Tax treatment depends on plan design and who pays the premium. Confirm your own position with a tax advisor.
• Nothing here is a quote. Premiums depend on age, health, amount, and the insurer, and no product is right for everyone.

A short checklist for your own plan

Pull out your benefits booklet and find four things: the exact multiple or flat amount of your life coverage, whether it reduces at a certain age, whether the plan lets you convert to an individual policy when you leave, and how long you have to act after your last day. Those four answers tell you the size of the gap you are actually working with.

*This article summarises published rules and research for general information, is current as of the date shown, and is not personalized financial, tax, or legal advice.*

Sources

• Canadian Life and Health Insurance Association. *Canadian Life & Health Insurance Facts, 2025 Edition*. 2025. PDF
• Province of British Columbia. *Insurance Act, RSBC 2012, c. 1, Part 3 (Life Insurance)*. BC Laws
• Province of British Columbia. *Insurance Act, RSBC 2012, c. 1, Part 4 (Accident and Sickness Insurance)*. BC Laws
• Government of Canada, Department of Justice. *Income Tax Act, RSC 1985, c. 1 (5th Supp.), section 6*. laws-lois.justice.gc.ca
• Statistics Canada. *Job tenure can be elusive, especially for some workers with disabilities*. Accessed 28 August 2026. statcan.gc.ca

If you want a second set of eyes on your benefits booklet and a straight answer about what a personal policy would add, book a free no-pressure call with Milo. He is an independent broker based in Burnaby, he compares Canada's top insurers rather than working for one of them, and he is happy to walk through it in English or Tagalog.