Plan members have options, but being unprepared shouldn’t be one of them

April 25, 2022

 For business owners, plan administrators, and sponsors


By Eric Egan
Product Director

I needed to set up an account before I could make an online purchase: name, address, email, and so on. As I scrolled down the list, entering the required details, I automatically skipped over the fields marked as optional. I quickly entered the minimum amount of information needed to make my purchase and get on with my day.

Not long afterwards, I went through my annual group benefits re-enrolment as a Manulife employee. I saw a long list of options available to me: optional life, optional critical illness, optional AD&D.

I couldn’t help but wonder – do plan members see these benefits as being less important, simply because they’re called optional?

Because, if it’s optional, I don’t really need it. Right?

Considering 20% of Canadian households say they’d “experience financial adversity immediately” following the death of a primary breadwinner1, I argue that plan members should be looking at this coverage. I think optional benefits offer a convenient and affordable way to obtain the right amount of coverage needed to be better protected.

Closing the coverage gap with optional life insurance

Data compiled by LIMRA shows that only 16% of Canadians consider themselves to be very knowledgeable about life insurance, and 23% describe themselves as not very knowledgeable/not knowledgeable at all2. If many people don’t confidently understand their coverage, what are the chances that they will pause, consider, and make a purchase that our industry has labelled as optional?

More likely, I think they’ll behave like I did when I was online shopping: quickly enter the minimum amount of information needed so they can get on with their day.

Organizations offer these optional benefits to help their employees bridge the coverage gap. But have insurers and employers done a good job explaining how core coverage and optional benefits can work together? And how the core coverage almost always needs topping up?

Overall, 68% of Canadian households owned life insurance in 2019 (44% had individual coverage; 49% had group coverage)3. And in its 2021 Fact Book, the Canadian Life and Health Insurance Association says the average amount of life insurance protection per Canadian household is currently $442,0004. Meanwhile, the federal government’s Financial Consumer Agency of Canada says, “experts generally recommend purchasing life insurance coverage worth 7 to 10 times your annual salary in order to protect your family * 5.” 

With about a third of Canadian households without any life insurance (32%), and almost as many households (30%) saying they should have more6, we have a lot of work to do to help close the coverage gap for plan members. We need to make it easier for people to understand how much coverage they need. And we need to make optional benefits a much more prominent part of those decisions.

Yes, plan members have options. But being unprepared for an illness, disability, or death shouldn’t be one of them.


*The information in this article is not to be relied upon as advice for specific situations. Individual circumstances may vary. You may wish to contact one of Manulife's licensed insurance advisors or your licensed insurance agent if you need advice about your insurance needs.


1,2,3,6LIMRA, 2019 Canadian Life Insurance Ownership Series – Household Trends study, 2019.

4 CLHIA, Canadian Life & Health Insurance Facts, 2021 Edition, 2021

5 Financial Consumer Agency of Canada, How much life insurance you needaccessed November 18, 2021