*This post is from CMB partner Finuity Wealth. Find out more about group benefit solutions here.
Many business owners eventually ask the same question: “If my employees can buy their own insurance, do I really need a group benefits plan?”
It is a fair question, especially when premiums are rising and every cost line is under review. On the surface, letting employees handle their own coverage can seem simpler and more flexible. In practice, the opposite is usually true.
For most Canadian employers, a well-structured group plan provides better value, stronger protection, and a clearer return in recruitment and retention than leaving staff to piece together individual policies on their own.
Why This Question Comes Up
The pressure on employers is real. Health and dental premiums have increased over time. Disability and life insurance rates can fluctuate. Smaller organizations in particular may wonder if a group plan is still worth it.
You might hear comments such as:
- “My team is young. They do not use many benefits.”
- “Several employees are already covered under a spouse.”
- “Can’t people just buy what they need themselves?”
Underneath those questions is a strategic choice. Are benefits part of your total compensation offering, or simply a cost to be minimized? The answer often determines whether a group plan or an individual approach makes more sense.
Cost Efficiency: Why Group Plans Usually Win
Insurance is about pooling risk. A group benefits plan does this at the employer level. Risk is shared across all eligible employees, which generally leads to:
- Lower premiums per unit of coverage than individual policies
- Access to benefits that might otherwise be unaffordable or unavailable
- Reduced impact of one person’s health history on the overall cost
Individual coverage, by contrast, prices risk employee by employee. Age, health status, medical history, and lifestyle all play a role. For someone with pre-existing conditions or a complex history, individual coverage may be expensive or declined altogether.
Group plans are not immune to cost pressures, but they usually remain a more efficient way to provide protection to a broad team.
Coverage and Access: What Employees Can Actually Get
A group benefits plan often includes types of coverage that can be difficult or costly for employees to secure on their own. Common examples include:
- Extended health and dental coverage
- Short- and long-term disability insurance
- Life insurance at a meaningful multiple of salary
- Optional critical illness coverage at preferred group rates
In many cases, coverage is provided on a “non-evidence” or guaranteed basis up to certain limits. That means employees do not need to complete medical questionnaires or undergo underwriting to be covered at those levels.
With individual coverage, each employee must apply and be approved. Pre-existing conditions may be excluded, and some employees will pay more or be declined. For an employer that wants a baseline of protection across the entire team, a group plan usually delivers that more effectively.
Tax Treatment at a High Level
Tax rules vary by benefit type, but in broad terms:
- Many employer-paid health and dental premiums are deductible business expenses.
- Employees receive health and dental benefits tax-free under current Canadian rules.
- Premiums for life and disability benefits may be treated differently, which is one reason plan design and funding decisions matter.
When employees buy individual coverage, they pay with after-tax personal dollars and must manage the choices and trade-offs themselves.
A group plan allows the employer to use corporate dollars in a structured way and to design a program that balances cost, value, and tax efficiency.
(Employers should always confirm the specific tax treatment of their plan design with their tax advisor.)
Group Benefits as a Talent Strategy
Benefits are not simply a line item. They are part of your value proposition as an employer.
Employees consistently rank health and wellness benefits as one of the most important elements of total compensation, often behind only salary and time off. A well-designed group plan:
- Signals that the organization takes employee well-being seriously
- Reduces financial stress, which supports productivity and engagement
- Helps you compete for experienced talent against larger employers
If you remove the group plan and tell employees to “buy their own,” the message is different. Even if salaries remain competitive, the overall package can feel thinner and less secure.
In a competitive labour market, that perception matters.
Control and Customization for the Employer
A group plan gives employers a level of control that is not possible when everyone buys coverage on their own.
You can:
- Decide which benefits to include and at what levels
- Set eligibility rules that reflect your business model
- Choose how costs are shared between the company and employees
- Adjust the plan over time as your workforce changes
You also gain visibility into overall cost trends and usage patterns. That information supports better decision-making when it is time to renew or redesign the plan.
With individual coverage, you lose that visibility and consistency. Some employees will be well protected, others poorly insured, and there is no unified strategy.
When Individual Coverage Still Has a Role
There are situations where individual coverage makes sense:
- Very small teams where a group plan is not yet available or practical
- Contractors or part-time workers who are ineligible for the group plan
- Employees who want to “top up” protection beyond what the group plan offers
In these cases, a combination approach often works best. The employer provides a solid foundation through the group benefits plan, and individuals supplement coverage as needed based on their personal circumstances.
Pulling It All Together
Choosing between group benefits and individual coverage is not just a cost decision. It is a strategic choice about how you want to support your employees and position your business.
For most employers, a group benefits plan:
- Provides better cost efficiency across the team
- Delivers broader and more reliable access to coverage
- Strengthens recruitment, retention, and workplace culture
- Offers more control and flexibility over time
Individual coverage can fill gaps, but it is rarely a complete substitute for a well-designed group plan.
How Finuity Wealth Can Help
Designing the right benefits strategy is not a one-time task. It requires an understanding of your workforce, your budget, and your long-term plans.
Finuity Wealth works with Canadian employers to:
- Compare group plan options to individual alternatives
- Optimize plan design for cost, value, and competitiveness
- Communicate benefits clearly so employees understand what they have
If you are weighing whether to maintain, redesign, or introduce a group benefits plan, we can help you evaluate the options and build a program that supports both your people and your business.