Dependant life insurance is usually part of an employer or group benefits plan. If your eligible spouse or child dies while covered, the plan pays a set benefit, subject to its terms.
Dependant life insurance benefits are often quite modest. If the amount is not sufficient to cover your needs, consider adding a rider to your life insurance policy or taking out a stand-alone policy.
To illustrate eligibility, benefit amounts and coverage timing, we reviewed the federal Public Service Management Insurance Plan summary, the plan’s detailed booklet, the plan’s life-events guidance and CLHIA’s group-insurance guideline.
What Is Dependant Life Insurance?
Dependant life insurance covers the lives of eligible dependants, typically a spouse or children. The dependant is the person insured. If they die while covered, the benefit is generally paid to the employee or member, subject to the insurance contract.
How Dependant Life Insurance Works
You will enrol in the group insurance plan and pay any required contribution. Next, you will report your dependants as instructed. If a covered dependant dies, you will file a claim under the policy, provide any required documentation, and receive any approved benefits.
The insurance company will determine if the dependant was eligible and coverage was in force at the time of death. The insurance company will determine any benefits based on the terms of the certificate. Different plans will provide different benefits and have varying definitions of an eligible dependant. As an example, the federal government’s Public Service Management Insurance Plan provides $5,000 in dependant life insurance for a spouse and $2,500 for each eligible child.
Who Qualifies As A Dependant?
| Eligibility issue | Public-service plan example | What to verify in your plan |
|---|---|---|
| Spouse | In the public-service example, a legal spouse or a partner in a conjugal relationship for a period of at least one uninterrupted year. | Check the plan’s marriage status, common-law time requirement, separation terms and one-spouse rule |
| Child | An unmarried child over 14 days old and under 21 years of age, or under age 25 if a full-time student, who meets the plan conditions. | Confirm the birth threshold, age, school status, residence and relationship. |
| Older child with a disability | Coverage under the public-service plan may continue if the disability and dependency requirements are met. | Check the deadline to give notice, what proof is needed, and whether coverage was already in force. |
| Other relative | An individual would not automatically be treated as a spouse or child under the ordinary definition. | Confirm that the certificate expressly names the relationship. |
Also, don’t assume coverage will automatically begin on the date you have a new spouse or child. You may be required to provide medical evidence if you fail to enrol your new dependant within the time allowed. In the public-service example above, reporting a new spouse or child within 60 days may avoid that requirement in some cases. Different plans allow different periods to enrol new dependants. Check the wording of your plan certificate.
When Dependant Life Insurance Makes Sense
Dependant life insurance can help offset some of the immediate costs associated with the death of your dependant. Dependant life insurance through your employer is easy to get and likely won’t cost much. However, you may find that the amount of insurance offered through your group benefits, or the length of time of coverage, isn’t enough to meet your needs. Consider the ongoing financial needs of your family, including:
- child care costs;
- transportation costs;
- income that would be lost;
- cost of family or elder care;
- outstanding debts.
Read More: Estimate Your Family’s Life Insurance Needs
What To Ask Before Opting Into Dependant Life Insurance
Who is insured and who receives the benefit? How would you file a claim?
What level of coverage is provided to a spouse? To each child? Are higher coverage levels available that you could elect?
What are the eligibility requirements? When does coverage begin? Is there a major life event that would require evidence of insurability?
What major life event(s) would affect coverage, such as retirement, termination of employment, going on leave, divorce, or a child losing eligibility?
Can you continue or convert coverage after a major life event? Is there a deadline to request conversion?
Read More: Review Life Insurance Needs for New Parents
Alternatives To Dependant Life Insurance
| Option | Potential fit | Limitation to check |
|---|---|---|
| Group dependant life | Small immediate-cost need with low-cost workplace access. | Often tied to plan eligibility and fixed benefit amounts. |
| Spouse or child rider | Can add coverage to an individual policy you already hold. | This coverage may have conversion limitations and may end when the base policy ends. |
| Separate individual policy | A larger or longer-term need with independent ownership. | Requires separate underwriting and a separate premium. |