Guide to Dependent Life Insurance (2025)

What is dependent life insurance?

Dependent life insurance is a type of policy that is offered by some employers in Canada. As a quick overview:

• Covers an employee’s dependents (spouse, children)
• Employee is the beneficiary
• Employee receives a lump sum payout if a dependent passes away
• Usually an add-on to a group life insurance policy, not a standalone policy

Take note

This coverage is an employee benefit tied to your employment. In other words, this employer-sponsored optional life insurance will stop if you take a new job.

How does dependent life insurance work?

Dependent life insurance works by choosing a coverage amount and then adding specific dependents to your policy. You can select different coverage amounts for your spouse and for children based on how much life insurance you need.

Here’s how you sign up for dependent life insurance:

• Opt into your employer’s dependent life insurance, if offered
• Register your dependent children and spouse
• Choose a coverage amount
• Pay the premium (or your employer may pay or share the cost with you)

Did you know?

There are two common riders available on a dependent policy: a prenatal benefit which covers stillbirths and a waiver of premium which kicks in if the employee becomes totally disabled.

‍Here’s who may qualify as an eligible dependent (depends on your provider):

• Spouse or partner
• Children (including adopted children) up to 25 years of age, if they’re in school 
• Disabled dependents who are overage

Here’s what would happen if one of your named dependents passes away:

• Report the family member’s death to the insurer with documents to verify
• Submit your claim and receive the death benefit payout
• Coverage for the deceased person will end and your policy will adjust

Pros and cons of dependent life insurance

Personal life insurance policies may already include some coverage for your loved ones. For instance, PolicyMe’s individual policy for term life insurance has a no-cost $10,000 benefit for children.

Is dependent life insurance worth it?

A dependent life insurance may not be worth it for most Canadians, and here’s why:

• Premiums are small and so are payouts 
• Premiums are a sunk cost if you leave your job

Many Canadians are tempted by dependent life insurance coverage because it’s cheap. And among Canadians without insurance, nearly one in four (23%) have kids living at home. We get it, you want to take care of your family. 

Consider dependent life insurance if you see yourself in one of the categories below:

• You’re a young married employee: This policy can give you low-cost coverage for funeral costs if your spouse or child passes away.
• You’re a parent with a limited budget: This policy could cover your spouse with a small safety net if you can’t afford an individual policy right now.
• You already have term coverage: This policy could act as a basic add-on to cover funeral costs, if you already have a term policy to cover income replacement.
• Your dependents are in poor health: You can get minimal coverage for your dependent who may not normally qualify for individual term insurance because of their health.

Ultimately, dependent life insurance offers very little coverage especially when compared to better options like a personal life insurance policy, which may be well worth the cost. 

Dependent coverage is a nice add-on but it’s more of a gesture benefit than a real financial safety net. For most Canadians, term life insurance is the real value for money.

“It’s safe to rely on group life insurance when you have longevity with your employer, like an Ontario teacher. If you’re not likely going to switch careers or lose access to their life insurance benefits through work, it can be okay to rely on that policy.” – Erik Heidebrecht, Life Insurance Advisor

Is term life insurance an alternative to dependent life insurance?

Term life insurance is a fantastic alternative to dependent life insurance in Canada:

• Benefit amount can be much higher with term life insurance (like hundreds of thousands)
• Premiums are only slightly higher with term life insurance (like dollars)

Dependent life insurance/group benefits insurance through your job may not actually provide enough coverage to meet your family’s needs:

• Coverage is typically capped at $100k, or one to two times your annual salary
• Leaving your job means losing your coverage, in most cases

Term life insurance vs. dependent life insurance

Payout and premiums are the biggest differences when comparing term life insurance vs. dependent life insurance. Plus, group plans limit additional coverage whereas term life insurance is typically more flexible.

Take a look at them side-by-side:

For most Canadians, the best way to protect their family’s financial security is individual life insurance for the top income-earner and investing the rest. 80% of Canadians who have life insurance feel confident in their family’s financial security, according to a 2025 study.

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Our take

If you need life insurance, you should get term life insurance because then you don’t need to worry about job security and can get a bigger payout.

FAQ: Dependent life insurance