A group life insurance policy can support employee financial and mental wellness as they pay off debt, mortgages and other liabilities, says Kevin Dorse, assistant vice-president of strategic communications and public affairs at the Canadian Life and Health Insurance Association.
“Knowing they have a confirmed payout amount upon death gives comfort to an employee and their beneficiaries when they consider what other individual life insurance they may need in order to supplement their group plan.”
The majority of life insurance in Canada is sold on an individual policy basis, he notes, with the remainder sold as part of group plans. Indeed, in terms of total coverage, 65 per cent of life insurance owned is held as individual policies, compared to 35 per cent as group plans. In 2021, insurers collected $25.6 billion in life insurance premiums and, of that total, 17 per cent was paid as part of a group plan, according to the CLHIA’s annual fact book.
Group policies and individual policies are intended to fulfil different needs for the insured, adds Dorse. “Group life insurance is a confirmed lump sum that can go towards debts and liabilities most employees will have during their working life. Individual life insurance is designed to supplement a group benefit, but also to provide succession planning later in life. The products also differ in how rates of coverage are determined, as group life insurance is typically calculated according to earnings.”
A new report by multinational consulting company Capgemini found more than half (56 per cent) of Canadian employees want innovative life insurance policies, but only 26 per cent of insurers are providing these products.
It also found a life insurance ownership gap among younger employees, since the traditional milestones associated with the purchase of a life policy — such as marriage and raising a family — are taking place later in life or not at all.
“A lot of younger individuals will take [life insurance] on at the bare minimum,” says Samantha Chow, global leader for life and annuities and benefits at Capgemini. “No one talks to them about how it can be used during their life. There are uses during your life, not necessarily just in death. It’s an opportunity for employers to educate employees as to why having this kind of insurance is important, but also for the life insurance carriers in the Canadian market to grow and develop what ultimately is a shrinking population.”
The report also found more than half (56 per cent) of Canadians were highly likely to consider multi-stage retirement, impacting how employees approach life insurance purchases. “What’s interesting about the Canadian market is the ability for employees to think about how they stage their retirement,” she says.
“Canadians likely think about retirement at a younger age than the rest of the world does. They’re buying different products throughout different stages. It usually starts with the employer, . . . but as they get older, using banks and other means they can start to layer in.”