GA group life insurance policy is a great perk to have, especially considering how much more affordable it usually is compared to a private policy. But depending on your situation, the plan your employer provides might be lacking in some areas.
In this case, you may consider supplementing your company’s plan with your own private policy to ensure you have adequate coverage and the ability to customize the policy according to your specific needs.
Let’s take a closer look at both group life insurance and private life insurance policies to help you decide whether or not your employer’s plan is enough, or if adding your own private policy is appropriate.
What Is Group Life Insurance?
Group life insurance is a type of policy that covers a specific group of individuals, such as employees of the same company. The plan sponsor owns the insurance plan, this is typically the employer. All members of the group are offered life insurance coverage under the plan.
When a group member passes away, their family will receive a death benefit payout according to the policy. This benefit amount is usually based on a multiple of the employee’s earnings with the company.
What Is Private Life Insurance?
A private life insurance policy differs from a group policy in that an individual purchases a plan on their own. The policy is owned specifically by the individual covered and provides a specific amount of coverage to the policyholder.
In the event the policyholder passes away, the beneficiaries will receive a death benefit payout based on the policy, as long as it’s in good standing at the time of the policyholder’s passing (ie. premiums are up-to-date).
Private Life Insurance Policies Can Be Personalized
Private life insurance can be personalized according to what the policyholder chooses, rather than what a group life insurance plan sponsor chooses.
For instance, there is an option to choose between a term policy and a whole life insurance policy. A term policy expires after a certain amount of time, such as 10, 20, or 30 years. These policies are more affordable than whole life insurance and are usually a more popular option for those who are just looking for coverage for a certain amount of time.
A whole life insurance policy, on the other hand, remains in effect your entire life, right up until you pass away. As long as you stay on top of the premiums, the policy will not expire until you pass on. Given this trait, whole life insurance is usually more expensive than term life insurance.
Main Differences Between Private Life Insurance And Group Life Insurance
There are several key differences between group life and private life insurance policies, as displayed on the following chart:
| Group Life Insurance | Private Life Insurance | |
| Cost | Can be cheaper than private (members share risk and costs of the plan) | Can be more expensive than group life (one policyholder is responsible for the cost of the policy) |
| Coverage Amount | Depends on the plan | Depends on the plan |
| Term | Usually term life (ends when you quit/retire) | Term or whole life offered |
| Eligibility | – Minimum hours worked- Possible waiting period | – May require a medical exam |
| Medical Exam | No | Yes (there are many providers that offer no medical exam life insurance) |
| Pre-Existing Conditions | Yes, coverage for pre-existing conditions varies according to the specific plan. | Yes, but depends on provider and generally results in higher rates. |
Of particular interest are the following factors:
Cost
Group life insurance is cheaper than private life insurance for a few reasons. For starters, the risk of a claim is spread out amongst many people, as opposed to just one person. Further, employers typically cover half of the premiums for most benefits under a group life insurance plan.
In addition, the costs incurred by employees for their group life insurance plan contributions are taken from their pre-tax income.
With private life insurance, the entire cost of the premium is paid for by the individual with no financial assistance from an employer. In addition, premiums are paid using after-tax dollars.
Coverage
While group life insurance is cheaper, it can be more limited compared to private life insurance and usually expires when you retire or quit your job. A private policy, on the other hand, will expire only according to your specifications. For instance, if you choose a whole life insurance policy, coverage will never cease while you’re still alive, as long as you’re up-to-date on your premiums.
Control
A group life insurance policy will be crafted by the employer and the insurance company. But a private policy can be customized to suit your circumstances without having to settle for what your employer’s group policy offers in terms of coverage.
Should You Get Private Life Insurance If You Have Group Life Insurance?
As mentioned, a group life insurance policy can be rather limited, depending on your needs. If you feel that the plan your employer offers is too limited for you, you have the option to take out your own private life insurance policy to fill in any gaps.
Here are a few reasons why you might want to buy a private life insurance policy, even if you’re a member of your employer’s group plan:
If You Plan To Switch Jobs
Your group life insurance policy is tied to your employment. If you quit one day or retire, you’ll no longer be covered. Having a private policy as a backup will provide you with continued coverage in the event you leave your job one day, for whatever reason.
Policies Are More Expensive Later In Life
If you decide at some point in life to take out a private life insurance policy, you’ll need to consider the fact that policies tend to increase in price with age. The older you are, the more risk the insurer will assume. To offset this risk, the insurance provider will charge you higher premiums.
More Options
As noted earlier, a group life insurance policy does not provide customized coverage the way a private policy does. If there are gaps in your group life insurance plan, you may want to consider taking out a private policy to give you the coverage you need and more control.
How To Find The Best Private Life Insurance Provider
Group life insurance is great, but having a supplementary private life insurance policy may be a good idea if your employer’s plan doesn’t provide adequate coverage or if you plan to quit or retire sometime soon. If you plan to buy a private life insurance policy, here are a few of the more popular providers to consider:
Policy Me
PolicyMe is an online insurance company that offers Canadians term life insurance and is backed by Canadian Premier Life Insurance Company. PolicyMe offers terms between 10 and 30 years and coverages ranging from $100,000 to $5,000,000. Users can fill out a simple online application, that only takes 20 minutes, to receive an instant quote. PolicyMe is currently available to Canadians in all provinces and territories.
- Some Of The Lowest Rates In Canada – PolicyMe offers rates for term life insurance that are roughly 5% – 10% lower than other providers in Canada.
- Instant No Obligation Quotes – If you answer a few questions, PolicyMe will provide an estimated rate based on your coverage needs.
- Couples Save – Apply with your spouse using PolicyMe’s Joint Application and save 10% off the first year of the policy.
- Coverage For Your Children – All PolicyMe plans include Child Coverage at no extra cost.
- No Medical Exams – Healthy clients may not require a medical exam. Keep in mind that if you have a pre-existing medical condition, you may be required to complete a medical exam or provide additional medical records.
- Easy Cancellation – PolicyMe policies can be changed or cancelled at any time with no fees or penalties.
Emma
Emma is an online insurance platform that allows Canadians to compare different Canadian insurers without having to meet with anyone face-to-face. You can get a quick quote on a policy within minutes after inputting a few pieces of information about yourself and your needs.
Your eligibility for life insurance will be quickly assessed according to the information you provide. Emma offers both term and permanent life insurance policies.
- Completely Online – Most life insurance providers require an in-person visit, but with Emma you can complete the application online in a few minutes.
- Low Rates – With Emma, you can find life insurance plans starting as low as $8 per month.
- Refund Guarantee – If you’re not happy with your plan, you have 15 days to cancel and get a refund.
PolicyAdvisor
PolicyAdvisor is another online insurance brokerage that allows Canadians to compare the top insurance providers in the country and find the lowest rates on policies.
The online aggregator will narrow down a list of insurers and policies based on a few pieces of information that you’ll be asked to provide. Then, you can compare and contrast the policies and rates offered according to your specifications. Insurance policies offered include both term and whole life insurance, no-medical life insurance, critical illness insurance, disability insurance, and mortgage protection insurance.
- No Fees – When you use PolicyAdvisor, you won’t be subject to any fees for using their brokerage services
- No Bias -. Policy Advisor is a private company that is not affiliated with any one insurance company. That means the offers they provide are honest and without bias.
- More Options – PolicyAdvisor is partnered with 25 different insurance companies in Canada to help provide more options and lower rates.
Rates.ca
On Rates.ca, you can find rates for a host of products, including term life insurance, whole life insurance, house insurance, travel insurance, car insurance, mortgage rates, credit cards, and personal bank accounts.
With just a few clicks, a range of rate quotes will pop up from the top providers in Canada to help you narrow down where you can get the best rates for the product you need.
- Works With Big Insurance Providers – Rates works with some of the biggest insurance companies in Canada such as Desjardin Insurance, Sonnet, Wawanesa, SqaureOne Insurance and other providers.
- Compare Rates – Due to Rates.ca’s large list of partners, they’re able to offer you competitive rates and policies.
InsuranceHotline
For over 20 years, InsuranceHotline has offered an online platform to help Canadians find the lowest rate on policies from more than 30 insurance providers. InsuranceHotline offers car and motorcycle insurance, house insurance, travel insurance, business insurance, term life insurance, and whole life insurance.
- Get A Quote – Get a quote from multiple insurance providers to compare rates and policies.
- Works With Big Insurance Providers – Like the other insurance brokers, InsuranceHotline also works with a number of reputable insurance companies such as RBC Insurance, Desjardin Insurance, Empire life and a number of other providers.
Final Thoughts
Life insurance is a great product to have to keep your family members financially covered in the event that you pass away. If you’re employed, your company may offer a group life insurance plan. But if you find that this plan does not provide you with as much coverage and control as you’d like, you may choose to supplement it with your own private policy.
