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Life insurance is something of a touchy subject. It can be difficult to bring the topic up because people may not want to discuss insurance that focuses on the end of life. Others might be under the illusion they don’t need life insurance, or that it’s some sort of scam.

A new survey suggests that many Canadians aren’t having this important conversation. It found that many Canadian employees aren’t sufficiently covered. One of the reasons is that they’re relying too heavily on the policies their employers provide them, which can raise a host of problems.

What Employer-Sponsored Insurance Provides

The big problem isn’t so much that Canadians have coverage through their employers. It’s more that most people who have life insurance have their policy through their employer. Of those who have employer-sponsored insurance, more than half have no other coverage.

That means many Canadians are relying solely on what their employers provide.

Employer-sponsored policies are a great starting place. The average policy provides around one to two times a worker’s annual salary. That often ranges between $50,000 and $100,000. The average is around $55,000, based on the current average Canadian salary.

Is That Enough for You?

The question that employees need to ask themselves is whether or not one or two years’ worth of salary is enough for their families, especially Canadians between the ages of 30 and 50. People in this group often have more financial obligations, including mortgages, young children, or college-aged children.

Most people aren’t thinking about how they’ll provide for their spouses long-term either. A life insurance policy that provides the amount of your salary or double that would cover one to two years of expenses. What happens after that?

This might be enough time for a spouse or partner to figure out what they’re going to do. In most cases, they would likely need to sell their home or take other actions to secure their financial future.

This could jeopardize college funds for children or other aspects of life, especially for younger children.

With this in mind, Canadians should be asking themselves if their employer-sponsored policies are really providing enough.

Is Extra Coverage Necessary?

As noted, having an employer-sponsored policy is a great start. In fact, some Canadians don’t have life insurance at all. They may not have a policy provided through the workplace, or they may have declined coverage. Self-employed Canadians might not take out a policy, and older Canadians could decide not to renew term life policies, especially if they’re on fixed incomes.

Canadians would be wise to look into taking out their own supplemental coverage. This adds to what’s already provided by your employer. You could take out a supplemental term-life policy that would cover large debts such as a mortgage or school loans. Another option is a permanent policy, which could provide income security for a spouse for a much longer period of time. It might also provide a lump sum for funding your children’s education. Permanent life insurance can even be used as part of a retirement plan.

Protecting Yourself and Your Family

Life insurance policies are important to consider because they provide for you and your family.

Having a separate policy is also wise in a world where employers are scaling back benefits or even letting people go without much notice. While it’s likely that employers will add more benefits as they attempt to attract top talent in the post-pandemic era, it’s not guaranteed that they’ll always have good life insurance policies as part of their package.

Having your own policy ensures you have continued coverage even in the face of job interruption.

Help Your Employees Get Better Coverage

If you’re an employer, you might want to consider the life insurance policies you offer to your team members. In a competitive job market, a better life insurance policy could be part of the benefits package and total compensation you use to attract the best candidates on the market.

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Mario Malatesta

With experience in the financial services industry and the group benefits industry, Mario Malatesta founded GroupQuest Benefits Resources Inc with just his business partner. Today, GroupQuest is a leading Group MGA in Canada with about $150M of group insurance premium in force and a support team of over 35 staff members including: renewal, marketing, sales, and service support teams. GroupQuest has offices in Vancouver, BC and Calgary, AB, as well as a head office in Mississauga, ON.   Mario is married with two children (twins). He enjoys many different sports and travelling with his family.

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