Critical illness insurance through work: do you need your own?

Some Canadian employers offer critical illness coverage as part of their benefits plan, but the part your employer pays for is usually a modest flat amount, the coverage often carries a pre-existing condition clause, and it may end when you leave the job. Workplace coverage is a good start, and it is usually issued without medical questions up to a set limit, which matters if you have a health history. Your own policy matters if the workplace amount is small relative to your needs, if you might change jobs, or if you want coverage that does not depend on your employer. How critical illness coverage works is in our critical illness insurance guide.

How common it is

In the 2024 Benefits Canada Healthcare Survey, 28 percent of plan sponsors said their plans include optional critical or catastrophic illness coverage. So if you have workplace benefits, check your booklet: you may already have some coverage, or the option to buy it.

Typical amounts

• Basic coverage, often paid by your employer, is usually a flat amount, such as $10,000, $25,000 or $50,000.
• Optional coverage, where your plan offers it, is paid by you and commonly runs from $10,000 up to $100,000 or $250,000, sometimes as a multiple of salary. Amounts above a set limit may need health questions.
• Small employers may face lower maximums, set by the number of employees.

For comparison, the Canadian Cancer Society estimates the average lifetime cost of cancer to a person with cancer and their caregivers at about $32,800, including out-of-pocket costs, the value of time spent on care, and lost earnings. A $10,000 benefit covers part of that.

What to check in your plan

Conditions covered. Group plans commonly cover about 25 conditions, similar to individual policies, but some basic tiers cover only a few.

Pre-existing condition clause. Group plans often exclude conditions you had symptoms of, saw a doctor about, or were treated for in the 12 or 24 months before coverage started, if the covered illness is diagnosed in the first 12 or 24 months of coverage. Some insurers relax or remove the clause for larger employers. The industry’s consumer guide notes that these clauses are typically found in group and association plans. Fully underwritten individual policies usually deal with your health history at application instead, for example by excluding a specific condition.

The 90 day cancer exclusion. As with individual policies, cancer diagnosed, or showing signs or symptoms, in the first 90 days of coverage is usually excluded.

Tax. Premiums your employer pays for group critical illness coverage are generally a taxable benefit to you. The benefit itself is generally received tax free.

What happens when you leave the job

Group coverage normally ends with your employment. Some plans let you convert to an individual policy without health questions, but unlike group life insurance there is no industry standard for this, so it depends on your plan’s contract. The conversion terms we found were:

• Deadline: usually 31 days after group coverage ends, sometimes 60.
• Amount: often capped, for example at $100,000 and no more than your group coverage.
• Age: usually a maximum age to apply, often 65 (we saw 60 to 69).
• Limits: extras such as return of premium or waiver of premium may not be available, any remaining pre-existing condition period carries over, and conversion may not apply if the employer cancels the whole plan.

Our guide to group life insurance conversion covers the life side, which follows a more standard 31 day rule.

When your own policy makes sense

• The workplace amount is small compared with what a serious illness would cost you.
• You might change jobs, retire early or start a business, and your plan has limited or no conversion.
• You have a minor health history and want certainty up front. An individual policy is underwritten when you apply, so a condition you fully disclose is either covered or excluded by name in the contract. With a serious history, though, an individual policy may exclude that condition or be declined, and group coverage, whose clause usually applies only in the first 12 or 24 months, may serve you better.
• You want coverage that lasts, such as to age 75, regardless of your employer.

Individual coverage is underwritten on your health when you apply, so buying while you are healthy means a later diagnosis does not change your coverage or premium schedule. Our guide to whether critical illness insurance is worth it covers how to weigh it.

Frequently asked questions

How much critical illness coverage do workplace plans provide?

Basic coverage, often paid by the employer, is usually a flat amount such as $10,000 to $50,000. Where a plan offers optional coverage, you pay for it and it commonly runs from $10,000 up to $100,000 or $250,000, sometimes limited by the size of the employer.

Can I keep my group critical illness coverage if I leave my job?

Sometimes. Some group plans let you convert to an individual policy without health questions, usually within 31 days of your group coverage ending and sometimes 60, often up to $100,000 and under a set age. Conversion depends on your plan’s contract, so check your benefits booklet before your last day.

Do group critical illness plans have pre-existing condition exclusions?

Often, yes. A typical clause excludes conditions you had symptoms of, saw a doctor about, or were treated for in the 12 or 24 months before coverage started, if the illness is diagnosed in the first 12 or 24 months. Larger employers can sometimes remove the clause.

Is group critical illness insurance taxable?

Premiums your employer pays for group critical illness coverage are generally a taxable benefit to you. The benefit itself, if you claim, is generally received tax free.

What to do next

Start by reading your benefits booklet for the amount, conditions, pre-existing clause and conversion terms. A licensed advisor can then compare your workplace options with individual coverage.