Your employer's group life insurance: its limits

On the last day, there is the cardboard box, the access card to hand back, the cake in the conference room. Someone talks to you about the record of employment, the pension plan, sometimes the vacation balance.

Nobody talks to you about your life insurance.

That is not negligence. It is that, in everyone's mind, group insurance is part of the furniture: it has been there for years, you never think about it, and you vaguely assume it continues. Yet according to the Autorité des marchés financiers (AMF), Québec's financial sector regulator, the life insurance in a group plan "usually ends if you change jobs or when you retire."

That does not make group insurance a bad product. On the contrary, it is a real benefit, often a person's first contact with life insurance. But it is a product whose limits are written into its very structure, and it is better to know them before the day they apply.

What a group plan actually offers

The AMF describes group insurance as insurance "offered to all members of a group, for example all the employees of a company." It is often part of the benefits offered by employers, but also by unions and professional associations.

The main protections offered, according to the AMF, are health insurance, disability insurance, life insurance and travel insurance. The people who can be covered are the participant (the plan member), their spouse, their minor children and, generally, their children aged 25 or under who are full-time students.

The first advantage is obvious and considerable: "If your employer offers such insurance, you usually do not have to undergo a medical exam in order to join it," writes the AMF. For a person whose state of health would complicate individual underwriting, that is far from a detail.

Term insurance that does not say its name

Here is the most important feature, and the AMF states it in one sentence: "It is 'term' life insurance, which is in force for the duration of your participation in the group plan."

The word "term" generally appears nowhere in the employer's communications. People speak of "group life insurance," "basic coverage," "employee benefits." None of those terms signals an end date, because the end date is not a date: it is an event.

That event is your departure. Resignation, layoff, change of employer, retirement: in all of those cases, participation in the plan ends, and the protection with it.

The practical consequence deserves to be stated plainly. A person who counts on their group insurance as their only protection loses that protection at the precise moment they change jobs — often at the same time as they lose their income, and sometimes at an age where individual coverage costs more than it did at 30.

The salary unit rule

The amount of coverage is almost never a round number chosen by you. The AMF explains that it is "often calculated per salary 'unit,'" one unit corresponding to your annual salary.

The example the AMF gives is crystal clear: if you earn $40,000 a year, the standard coverage of one unit is equal to $40,000. Additional units are always equal in value to the first. Still following the AMF's example, if the first unit is $40,000, you can insure yourself for another unit of $40,000, but not for a unit of $50,000 or $30,000.

It is a simple mechanism, and it has two implications.

The first: your coverage is indexed to your salary, not to your obligations. A person on a modest salary with a mortgage and three children gets small coverage; a person on a high salary with nobody depending on them gets a large one. The plan knows nothing about your family situation.

The second: the amount offered by a group plan rarely matches, on its own, the total from a needs analysis. It forms a base, to which individual coverage is added — or not.

First unit and additional units: two different pricings

This point surprises many people, because it means that "group insurance" is not priced in a single way.

According to the AMF, in most plans it is mandatory to be insured for at least one salary unit. The cost of that mandatory coverage "is established mainly according to the characteristics of the group of participants." In concrete terms, your age and your state of health will not necessarily increase your premium. On the other hand, the AMF specifies that if the majority of the people in your group are over 60, your premium could cost you more — group pricing works in both directions.

For additional units, the logic changes completely. The AMF writes that "the cost of additional units is established according to your age and your state of health," that the characteristics of the group are not used in that calculation, and that you may have to undergo an assessment of your state of health, "because the insurer is not obliged to insure you beyond the first unit."

In other words, the exemption from a medical exam that is talked about so often concerns the basic coverage. Beyond that, you are assessed individually — which, as the AMF in fact recommends, is a reason to compare with what the individual market offers before automatically ticking the additional unit.

The conversion right: a door, with a deadline

When participation ends, there is a way out, and few people know it exists or within what time frame to take it.

The AMF describes it this way: "just before leaving that employer, you will normally have the right to convert your group life insurance into individual life insurance. This is what is called the 'conversion right.'"

Three elements to remember, all stated by the AMF.

The option has an age limit. "This option will be offered to you up to age 65."

It does not require proof of good health. "When a person converts their group life insurance into individual life insurance, they do not have to undergo a health test to prove that they are insurable." That is the main appeal of the mechanism, particularly for a person whose health has deteriorated.

It has a price, and sometimes a lower amount. The cost of the premium "is established according to the plan member's age. It is therefore possible that the premium will cost more once it becomes individual. It is also possible that the amount of insurance will be lower."

The words to underline in the AMF's first sentence are "just before." Conversion is requested at the time of departure, within a limited window set by the group contract. A person who thinks of it six months later generally discovers that the door has closed.

Joining is not a choice

One last element, often misunderstood. The AMF is explicit: "if you are eligible for the group insurance, participating in it is mandatory."

You therefore cannot turn down the basic coverage of a group plan on the grounds that you already hold individual insurance. The two coexist, which is one more reason to take the group amount into account in calculating your needs, rather than ignoring it.

And the beneficiary, in all of this?

Naming a beneficiary under group insurance follows the same rules of the Civil Code of Québec as naming one under an individual policy. Article 2449 in fact refers to "the policyholder or the participant" — and the participant, in a group plan, is you.

That means in particular that the designation of the person to whom you are married or in a civil union, made in a writing other than a will, is irrevocable unless otherwise stipulated. The enrolment form you filled out during your first week on the job therefore has the same legal effects as an individual contract signed at an advisor's office.

Frequently asked questions

Does my group insurance follow me if I retire?

According to the AMF, the coverage usually ends at retirement, just as it does on a change of job. Some employers maintain reduced coverage for retirees; that falls under the group contract, and can be verified with your employer or the insurer.

Is it worth paying for additional units?

The AMF recommends comparing: "Do not forget to find out the cost of group life insurance at work, if it is offered." Since additional units are priced according to your age and your health, they can be compared with the individual market like any other product.

What if I have already left my job without converting anything?

The conversion right is normally exercised at the time of departure. Once that deadline has passed, ordinary individual underwriting remains possible, with the usual health questions. Depending on the insurer and the product, some contracts do not require a medical exam.

How much individual insurance should I add?

That depends on the gap between your calculated needs and what your plan already covers. The AMF sums up the exercise: comparing "the insurance you have with the insurance you need in order to determine what you are currently missing and what you will be missing in the foreseeable future."

Does getting quotes commit me to anything?

No. Comparing quotes is free for the consumer and creates no obligation to buy. You pay only if you choose to take out a contract.

Sources

• Autorité des marchés financiers, "L'assurance vie collective": https://lautorite.qc.ca/grand-public/assurance/assurances-collectives/assurance-vie-collective (accessed August 10, 2026)
• Autorité des marchés financiers, "Assurances collectives": https://lautorite.qc.ca/grand-public/assurance/assurances-collectives (accessed August 10, 2026)
• Autorité des marchés financiers, "5 étapes à suivre avant de vous assurer": https://lautorite.qc.ca/grand-public/assurance/assurance-vie/5-etapes-a-suivre-avant-de-vous-assurer (accessed August 10, 2026)
• Civil Code of Québec, article 2449, text consolidated as of April 1, 2026: https://www.legisquebec.gouv.qc.ca/fr/document/lc/ccq-1991 (accessed August 10, 2026)