Do you need life insurance if you already have a TFSA, RRSP and workplace coverage?

Who this is for

People with some savings and some coverage through work who are not sure whether they need a policy of their own. Also people who have been told they must have one. This is a way of deciding, not a recommendation.

The five checks

1. Who depends on your income? If nobody does, and your debts would be covered by your assets, life insurance may have little to do. Single people with no dependants often need none, or only enough to cover final costs. Parents, a spouse who relies on your income, or a business partner change the answer.

2. What would your savings cover? Add up the TFSA, RRSP and other assets. Remember that the RRSP is taxed on death unless it rolls to a spouse, so its after-tax value is lower. Then compare with what dependants would need: income replacement for a number of years, the mortgage, child care, education.

3. What does the workplace plan actually say? Check the amount, usually one or two times salary. Check whether it ends when you leave, retire or are on long-term leave. Also check whether you can convert it to an individual policy when you leave. The FCAC notes that group coverage through an organisation usually ends when membership does.

4. Does the gap end at some point? If the shortfall exists only until the children are grown or the mortgage is paid, a term policy for that period fits. If it never ends, permanent coverage may be what fits. Examples are a dependant with a disability or an estate tax bill on property the family wants to keep.

5. Would you be buying something you already have? Mortgage life insurance from a lender, a workplace plan and an individual policy can overlap. Three policies covering the same mortgage is money spent on the same risk three times.

When the answer is probably no

Retired, debts paid, no dependants, and enough assets to cover final expenses and any tax at death. Insurance bought in that situation is usually an estate choice, not a protection need, and it should be weighed as one.

When the answer is probably yes

A young family with one main income, a new mortgage, little savings yet, and workplace coverage that would not last through a job change. The savings will grow into the role over time; the policy fills the gap until they do.

How the pieces connect

Savings and insurance meet at the same question: what would the household need if you were not there. The answer changes as savings grow, debts fall and children leave home. That is why a policy chosen at 30 should be looked at again at 45. None of this is a reason to stop saving; the TFSA and RRSP are doing a job the policy cannot.

What to prepare

When professional help may make sense

A business partner or key employee, or a dependant with a disability. A second marriage with children from the first. A large RRSP or rental property that will be taxed at death.

How Rex Tax may be able to help

We put the savings, the tax at death and the benefits side by side so the gap is visible. Parminder Singh Oberoi can then discuss whether, and how, to cover it through Punjab Insurance Agency Inc.

Official sources

• Financial Consumer Agency of Canada: Life insurance
• Financial Consumer Agency of Canada: Getting an insurance policy
• Canada Revenue Agency: Group term life insurance policies, employer-paid premiums

This guide is general information, not advice about your situation. It reflects the rules for the 2026 tax year. It has not yet been reviewed by a practitioner. The information was checked against the official sources listed above on the date shown. Rules change. Check the official sources above or ask us. How we prepare these guides.