Getting Life Insurance Through Your Employer – How It Works
Hi, WealthTrack founder David Pipe here. Life insurance is a vital part of financial planning, offering a safety net to your loved ones if the unexpected happens. Many Canadians may not realize that one of the easiest ways to access life insurance is right through your employer. Workplace group life insurance is often included as part of employee benefits packages, providing a convenient, affordable option for coverage.
But how exactly does employer-provided life insurance work in 2025? Is it enough to rely on? And what are the pros and cons you should consider before deciding if it fits your financial protection plan? This article breaks down everything you need to know about getting life insurance through your employer, especially as the landscape evolves this year.
Interested in Building Wealth?
Reach out to WealthTrack today!
What Is Employer-Provided Life Insurance?
Employer-provided life insurance, commonly called group life insurance, is a type of life coverage offered by many companies as a benefit to employees. Instead of buying a policy individually, you’re covered under a larger group plan arranged by your employer with an insurance provider.
Most often, group life insurance is a term policy that remains active only as long as you work for the company and pay (or have paid) your share of the premiums. The employer may cover all or part of the premium cost, making it an attractive perk.
Group policies typically don’t require a medical exam or detailed health underwriting for basic coverage, which makes enrolling easy and accessible for most employees.
How Much Coverage Does Employer Life Insurance Usually Include?
The amount of coverage varies widely depending on the employer and insurer. The most common approach is to offer a multiple of your annual salary, such as 1x or 2x your salary. For example, if you make $60,000 a year and your employer offers 2x salary coverage, your life insurance benefit would be $120,000.
Some companies provide this basic coverage free of charge as part of your benefits, while others may ask you to pay a small premium or give you the option to buy additional coverage (known as “optional” or “voluntary” life insurance).
While $100,000 or $200,000 sounds like a lot, it might not be enough depending on your financial situation, debts, dependents, and long-term goals.
The Pros of Getting Life Insurance Through Your Employer
1. Convenience and Ease of Enrollment
Since group life insurance is offered through your workplace, enrolling is typically straightforward. Many plans automatically enroll employees or offer a simple “opt-in” during benefits sign-up periods, with little to no paperwork.
2. No Medical Exams or Underwriting for Basic Coverage
Unlike individual life insurance policies, group life insurance usually doesn’t require health exams or detailed medical questions for basic coverage, making it accessible even if you have health issues.
3. Cost-Effective or Free Coverage
Many employers cover the full cost of basic group life insurance, meaning you get coverage at no direct cost. Optional coverage is often available at discounted group rates, which can be cheaper than individual policies.
4. Provides Peace of Mind
Having some life insurance coverage, even through your employer, can offer peace of mind that your family will have some financial protection.
The Cons and Limitations to Consider
1. Coverage Isn’t Portable
One of the biggest downsides is that employer-provided life insurance generally ends when you leave the company. That means if you change jobs, retire, or get laid off, your coverage typically stops, which can leave gaps in protection.
2. Coverage Amount May Be Insufficient
The default coverage offered may be too low to meet your family’s needs. For example, $100,000 might not cover a mortgage, childcare, debts, or future expenses. You might need to purchase additional insurance on your own.
3. Limited Customization
Group plans usually offer limited options when it comes to beneficiaries, riders (such as accidental death or disability), or customizing your policy to fit your unique needs.
4. Optional Coverage Costs Can Rise With Age
If you opt to buy more coverage, the premiums may increase as you get older, potentially making it less affordable over time.
5. May Not Cover Everyone Equally
Coverage levels and eligibility can vary based on your employment status (full-time vs. part-time), length of service, or other factors, which can create inconsistencies in protection.
Should You Rely on Employer Life Insurance Alone?
While employer life insurance is a valuable benefit, it usually should not be your only source of life insurance protection.
Most financial experts recommend assessing your personal and family needs to determine the right coverage amount. Employer plans can be a helpful foundation, but often you’ll want to supplement with a personal policy to:
Ensure your coverage is portable if you change jobs.
Customize your coverage and beneficiaries.
Get higher coverage amounts to fully protect your family and financial goals.
What’s New in 2025? Trends and Changes to Watch
The landscape of group life insurance continues to evolve in 2025, with several trends impacting employees and employers:
Digital Enrollment & Management: Many insurers now offer user-friendly apps and online portals to manage coverage, beneficiaries, and claims with ease.
Wellness-Linked Premiums: Some companies are incorporating wellness programs that can influence premiums or coverage amounts.
Hybrid Insurance Options: Employers are exploring combined life and disability packages, or integrating critical illness coverage.
Inflation Protection: A growing number of plans offer inflation riders or indexed coverage to maintain benefit value over time.
Greater Awareness: More employers are educating workers about how group life insurance fits into their overall financial plans.
Comparing Group Life Insurance to Individual Policies
FeatureGroup Life InsuranceIndividual Life InsurancePortabilityTypically not portablePortable if you change jobsMedical UnderwritingUsually minimal or noneRequired for most policiesCustomizationLimited optionsHighly customizablePremium CostOften subsidized or low costYou pay full premiumsCoverage AmountsLimited to group plan offeringsFlexible based on needsBeneficiary FlexibilitySome limitationsFull flexibility
Final Thoughts: Making the Most of Employer Life Insurance in 2025
Getting life insurance through your employer is an excellent starting point for financial protection. It offers convenience, affordability, and often automatic coverage with no medical hurdles. But it’s important to understand its limitations, especially the lack of portability and often insufficient coverage amounts.
As you navigate the benefits offerings in 2025, consider your personal financial picture and whether supplementing with an individual life insurance policy makes sense. Taking the time to review your options with a trusted financial advisor can ensure your family has the protection they need — no matter what happens.
If you have questions about how employer-provided life insurance works, or want help tailoring a coverage plan that fits your goals, don’t hesitate to reach out to a licensed insurance professional.
