Life Insurance Through Work vs Private Insurance: Which Is the Best Value?

Canadians think that retirement living would cost them $756,000. To be more precise, that's how much they think they should save up to retire in comfort.

The thing is, 90% of them don't have any formal plan in place to achieve that goal. In fact, 32% of Canadians within the 45 to 64 age bracket have no savings yet, and 19% of Canadians have no more than $1,000 stowed away.

Now, retirement or passing away may be far from your mind, but let's face it: Both are inevitable. That's why it's best to get life insurance through work or through a private insurer ASAP.

So, which one is better and more suited for you and your family's needs? Keep reading then as we’ll discuss this in more detail below!

The Lowdown on Employer-Issued Life Insurance

Employers aren't required by the law to provide life insurance to their employees. Neither are they legally-mandated to provide health insurance.

But employers know that these benefits are key to attracting and retaining talents. At the same time, the cost of employee benefits, which averaged $8,330 per employee in 2015, is a huge hurdle to them.

This high cost continues to force many employers to reduce coverage amounts. Some even no longer offer employer life insurance as part of the benefits package.

This has led to more people buying individual life insurance on their own. In 2016, individual life insurance accounted for 60% of all purchased life policies.

This tells us that Canadians are willing to shell out money for life insurance, as you should too. It also means that many believe their employment life insurance isn't enough. Especially for those nearing retirement, which means they're about to lose their coverage.

Determining Adequateness of Life Insurance Through Work

Let's say your employee benefits include a $100,000-value life insurance policy. Because you're part of a group plan, you pay less than what you'd otherwise shell out for an individual policy. Your employer shoulders a considerable part of the premium payments.

This is also more convenient since premium payments are an automatic salary deduction. You don't have to worry about missing payments, which can lead to forfeiture of your policy.

Employee-provided life insurance is also a plus for those with pre-existing medical conditions. That means you can get insured despite your current health status. You likely won't have to undergo a life insurance medical health exam.

The big question here is, do you think that $100,000 death benefit is enough to cover your family's needs? Not likely, especially if you factor in consumer debts, averaging $23,271 per Canadian.

That amount doesn't include mortgages, which averaged $198,781 per household in 2017. In total, mortgages make up two-thirds of the $2 trillion Canadian household debt in 2018.

So, as beneficial as employees' life insurance is, the fact is, it isn't enough. Relying on this coverage alone can put your family at serious financial risk.

Supplementing with Private Life Insurance

We're not saying you should nix the life insurance program offered by your employer. But you should take a closer look at the limitations and restrictions it comes with.

For instance, can you buy supplemental life insurance with the same insurer for less? If so, would they combine it with your existing employer-provided coverage? This may save you money on a bigger value policy, but it may mean incomplete policy ownership.

In short, you may lose your coverage if you lose your job or if you retire. So, be sure the supplemental coverage is under your sole ownership.

Determine as well if you can convert your employee life policy to an individual policy. You'd want to do this in case you have plans to switch jobs.

Now, you may be thinking your future employer may also offer life insurance as a benefit. But what about insurance while you still haven't signed that new employment contract? Without individual private insurance, you'd have no safety net while between jobs.

Another reason to supplement your employee life policy is to get your loved ones covered too. Your current policy may include your spouse, but they're likely getting minimal coverage. This may still be inadequate for your entire household.

Private Life Insurance Is Best Bought While You’re Young

You shouldn't wait until you're near retirement before considering private life insurance. That's because life policies cost more the older you get.

Also, keep in mind that aging comes with chronic health risks, such as heart diseases. In fact, 2.4 million Canadians 20 years and older have diagnosed heart disease. This is a pre-existing condition that often makes it hard to get life insurance.

As you can see, the longer you delay getting life insurance, the greater your risk of not qualifying for one. Even if you do qualify, it'll be way more expensive than when you buy one at a younger, healthier age.

Whereas buying private life policy early is your ticket to more affordable premiums. Some life policies also come with fixed premiums. You'll keep paying the same amount every month or every year, so long as you pay them on time.

When you buy private life insurance early, you may not have to undergo a medical exam. Even if you do, the tests will come out negative, so you'll still qualify for coverage.

Get Private Life Insurance for Greater Peace of Mind

While Canada has an unemployment rate of 5.6% at the end of 2018, there were still 88,000 jobs lost in January 2018 alone. That's 88,000 people who may have lost their employee life insurance in one month. We hope nothing of the sort happens to you, but this should tell you how easy it is to lose life insurance through work.

So, as early as now, consider investing in private life insurance. That way, you won't find yourself uninsured even while between jobs. Most of all, you can ensure your family stays protected in case something happens to you.

Ready to find the best private life insurance policy for you and your family? Then get a quote now to discover which policies have the lowest insurance rates in the country!