What Happens to Your Group Benefits When You Leave a Job in Canada

1What Ends, and How Fast

Group coverage belongs to the employer's contract, not to you. When the employment ends the coverage ends with it, usually on your last day or at the end of that month, and the three main benefits then behave very differently.

The asymmetry matters. The shortest clock sits on the benefit that is hardest to replace later. Health and dental can usually be bought again at some price. Life insurance, once your health has changed, sometimes cannot.

Nobody is obliged to chase you about this. The window runs from the date your coverage changed, not from the date you found out, and plan administrators are often dealing with the departure rather than your insurance.

2The 31-Day Clock on Your Life Insurance

Most Canadian group life contracts carry a conversion privilege: the right to move your group coverage to an individual policy with the same insurer, without proving you are healthy. Canada Life's own conversion fact sheet sets out the terms clearly.

You are eligible to apply even without medical evidence of insurability, and the triggers are broader than resigning:

• A change in your job status, which covers leaving, being laid off, or moving to a role or hours that end your eligibility
• Your employer ending the plan without putting something else in place
• Your employer reducing the amount of life coverage, which catches people who are still employed and never think to look

The deadline includes the money. Canada Life's wording is that you must apply within 31 days of the change, and that this “includes paying the first premium in full”. An application posted on day 30 with the payment to follow is not the same as a completed conversion, and that distinction is where people lose the right.

If you die during those 31 days before you have applied, Canada Life's fact sheet says it pays the maximum conversion amount anyway. The window protects you while you are deciding, which is a good reason not to panic, and no reason at all to leave it to day 31.

3What You Can Convert, and the Ceiling

Conversion is not a like-for-like transfer of whatever your group plan gave you. There is a cap, and on a generous group plan it can be well below what you are losing.

Read the first row against a real plan. Group life is often set at two or three times salary, so someone earning $90,000 might carry $270,000 at work and be able to convert only $200,000 of it. The gap is not a rounding error, and it is the part worth pricing separately. Sizing what you actually need is a different exercise, in our how much life insurance do I need guide.

Individual rates being higher is not a reason to skip it. Group rates are pooled across a whole workforce and subsidised by the employer; an individual policy is priced for you alone. The right comparison is against other individual policies, not against what payroll was deducting.

4The Move Almost Nobody Makes

Here is the part buried in the fact sheet that is worth more than everything else on this page, because it lets you have both outcomes instead of choosing between them.

Conversion policies are convenient but not cheap, because the insurer is taking you without any health information. A fully underwritten individual policy is usually better value if your health is fine. The instinct is to pick one. You do not have to.

1. Apply for the fully underwritten policy first, inside the 31 days. Canada Life confirms you can do this, and that you can apply for the non-conversion option first.
2. If you are accepted, you get the better-priced policy and the conversion right simply goes unused.
3. If you are declined on medical grounds, the fact sheet says you get the conversion policy instead, because you applied inside the window.
4. Either way you end up insured, which is not true of the version where you shop around for six weeks and then discover the window shut.

This only works if the clock is respected. The whole safety net depends on having applied within 31 days; outside it, a decline on the underwritten policy leaves you with nothing to fall back on. If you already expect a difficult application, our life insurance with a health condition guide sets out what the four possible outcomes actually are, and the no-medical life insurance guide covers the simplified issue market.

5Who Cannot Convert

Two exclusions in the same fact sheet catch people who assume the right is universal.

• Coverage ending on or after your 65th birthday. Conversion is not available, which removes the option at exactly the age when individual underwriting is hardest and most expensive. If you are approaching 65 and near a retirement or a restructuring, this is the single most time-sensitive fact on this page.
• A spousal relationship ending where coverage is being offered to a different spouse. The previous spouse cannot convert.

There is a planning point hiding in the first one. People often intend to sort out life insurance “at retirement”. If retirement is the event that ends the group coverage and it happens on or after the 65th birthday, the conversion right is already gone at the moment they go looking for it. Buying individual coverage while still employed, and while still healthy, is the version of this that works.

Group plans also frequently reduce life coverage at 65 rather than ending it. That reduction is itself a conversion trigger while you are under 65, which is one more reason to read the annual benefits statement rather than filing it.

6What to Replace, and in What Order

Leaving a job usually means replacing three things at once on no notice. Ordering the work by what expires soonest and what is hardest to get back beats doing it alphabetically.

1. Life, inside 31 days. Shortest clock, and the benefit that becomes unavailable rather than merely expensive if your health has changed.
2. Disability, as soon as possible. It usually ends with no conversion right at all, and for most working people it insures the largest asset they have, which is their income. The individual market is covered in our disability insurance guide.
3. Health and dental, inside roughly 60 days. Longer window and usually replaceable later, though you may face health questions once the conversion window closes.
4. Critical illness, if you had it. Conversion terms vary widely, so the booklet is the only authority. The individual product is in our critical illness insurance guide.

If you are moving to a new employer, do not assume the new plan closes the gap. New group plans often carry a waiting period of up to three months, benefit levels differ, and a pre-existing condition limitation can apply to disability coverage specifically. Compare the incoming plan against what you had, using our group benefits plan details as a checklist.

And if you are leaving to start something of your own, group benefits are available to very small companies, from 3 employees. That case is set out in our group benefits for small business guide.

7Frequently Asked Questions