Individual Life Insurance vs. Group Life Insurance: What’s the Difference?
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Individual Life Insurance vs. Group Life Insurance: What’s the Difference?
There are two ways to get life insurance coverage in Canada: 1) by purchasing a private life insurance policy, or 2) by receiving group life insurance coverage as an employee benefit.
There is a key difference between individual and group life insurance coverage:
- Individual life insurance: Individual plans are based on your finances and tailored to your family’s exact coverage needs, with the option to customize, renew, or convert your coverage as needed.
- Group life insurance: Group life insurance is a perk included in your benefits package with minimal coverage to help your loved ones out in the event of your death.
An individual life insurance policy is the only type of life insurance that can adequately address most Canadians’ life insurance needs. That’s because life insurance is a highly personal product. All your policy’s details—from the length of the coverage term to the amount of the death benefit your beneficiaries receive—need to reflect your unique situation to give your family real financial protection.
Group life insurance plans, by contrast, are better considered an employee perk. The death benefit from your employer’s plan could give your family a helpful boost in the event of your death, but it’s typically not enough coverage to ensure their ongoing financial security.
What is group life insurance?
Group life insurance policies are a common workplace benefit that offer basic coverage for a group of people. When companies choose to offer life insurance as a benefit to their employees, they select a single plan that offers the same coverage to every employee, with automatic enrollment for all.
The coverage offered by group insurance plans is typically limited:
- Coverage amount: Usually 1–2x annual salary (often capped, e.g., at $100k)
- Type of insurance: Usually term life insurance
- Policy options: Usually not portable or convertible to permanent life insurance
- Cost to employee: Usually included in benefits package with no added cost
Group life insurance is a great benefit, but you shouldn’t expect it to meet your family’s full insurance needs. Because these policies are one-size-fits-all, they typically don’t have enough coverage; instead, they’re intended as a helpful bonus to get your family through a difficult time.
- Group life insurance policies make up just 34% of active life insurance policies in Canada.
- One in four Canadians (25%) say they’re not confident that their families would be financially secure if they passed away unexpectedly.
- 80% of Canadians who have life insurance feel confident that their families would be financially secure in the event of their death.
What is individual life insurance?
Unlike the one-size-fits-all coverage included in your group benefits, individual life insurance is designed to secure your family’s financial stability in the event of your unexpected death.
The most popular type of personal life insurance is individual term life insurance, which provides a tax-free lump-sum payment to your beneficiaries if you die within a certain period of time (known as your policy term). Because you can choose the exact amount of that payout and the period your policy covers, a private term life insurance policy is the best way to meet your individual needs and make sure that your loved ones have what they need to go on without you.
The downside: Unlike with employer-sponsored coverage, which is included automatically at no added cost to you, you’ll need to request quotes, fill out an application, and pay the premiums on your individual policy. If you have pre-existing health conditions, you could see higher premiums or even be denied coverage in severe cases.
But Canadians often overestimate the cost of individual life insurance, leading some to avoid investing in this protection. According to PolicyMe’s 2025 Life Insurance Gap Report, more than one in three uninsured Canadians (34%) say that life insurance is simply too expensive, and 65% say they’re not likely to buy coverage in the next five years.
In reality, Canadian life insurance premiums start as low as $10/month for healthy adults in their 20s. What’s more, term life insurance premiums are level, meaning that you’ll pay the same rate until your policy renews or expires. Buying individual life insurance early in life could lock in low rates for decades to come.
Individual life insurance policies offer 3.5x more coverage, on average, than group life insurance plans. Individual life insurance plans make up 66% of policies in force in Canada as of 2024.
Is group life insurance enough?
The short answer: No, group life insurance isn’t enough for most Canadians, especially if you have children, a mortgage, or others who depend on your income.
The long answer: Your life insurance policy should include enough coverage to pay off any major outstanding debts (including mortgage, student loans, and/or credit card debt) and provide for your dependents after you’re gone. For most people, the ideal coverage amount is at least 7–10x their annual salary, but you may need additional coverage to account for financial goals like your children’s post-secondary education.
Not sure how much life insurance coverage you actually need, or if your current insurance benefits are enough for your family? PolicyMe’s free online life insurance calculator is a quick and simple way to estimate the amount of money your loved ones would need to be financially secure in your absence.
When you should supplement group life with an individual policy
You may need to supplement your group life insurance benefits with an individual term policy if:
- You have children
- You have other dependents, such as a spouse who doesn’t work or aging parents
- You have a mortgage worth more than 1–2x your annual salary
- You want to leave a legacy to your children or a charitable organization
- You have unique needs (e.g., high net worth, lifelong dependents) requiring lifetime coverage
How much does private life insurance cost?
The cost of private life insurance depends on your age, assigned sex at birth, coverage needs, overall health, smoking status, and more. For most adults aged 30–44, the average cost of a 20-year term life insurance policy with $500,000 in coverage is $20–$30/month.
* Monthly rates shown reflect the cost of coverage for a 35-year-old non-smoking applicant in good health.
Pros and cons of individual vs. group life insurance
For most Canadians, individual term life insurance is the most cost-effective way to provide for loved ones in the event of an unexpected death. If you have children, a mortgage, or other major debts or dependents, group life insurance should supplement a more robust individual policy.
Group life insurance
Individual life insurance
FAQs: Individual vs. group life insurance
Helene Fleischer is Content Marketing Manager at PolicyMe, with 9 years in content marketing and 4 in Canada’s insurance industry. She works with skilled writers and licensed insurance advisors to create useful resources that help Canadians navigate insurance decisions with confidence and clarity.
Helene Fleischer is Content Marketing Manager at PolicyMe, with 9 years in content marketing and 4 in Canada’s insurance industry. She works with skilled writers and licensed insurance advisors to create useful resources that help Canadians navigate insurance decisions with confidence and clarity.