What Is the Supplementary Death Benefit in Canada?

If you work for the federal government of Canada, you may already have life insurance coverage through the Supplementary Death Benefit (SDB). It is one of the most understated but valuable components of your compensation, offering lump-sum protection without the need to apply or pay high premiums.

But how much does it really offer? And is it enough to meet your family’s needs if something happens to you?

A Life Insurance Benefit Built into Public Service

The Supplementary Death Benefit is a form of group term life insurance automatically provided to eligible federal public service employees, as part of the Public Service Pension Plan. In most cases, it is calculated as twice your annual salary, rounded to the next $1,000. The cost is shared between the employee and the government, making it relatively affordable compared to private insurance.

Here is how it typically works:

The benefit is paid tax-free to your designated beneficiary if you die while covered.
If you retire, you may retain a reduced benefit for a nominal monthly cost.
There is no medical exam required as long as you are eligible under the plan.

How the SDB Compares to Other Life Insurance Options

Feature	Supplementary Death Benefit	Individual Term Life Insurance
Eligibility	Federal public service employees	Available to all applicants
Coverage amount	2x annual salary (reduced at retirement)	Customizable, based on need and budget
Cost	Partially subsidized by government	Paid entirely by the policyholder
Portability	Ends or reduces sharply at retirement	Stays with you regardless of employment
Underwriting	None while actively employed	Medical review usually required
Purpose	Basic employee benefit	Comprehensive income and debt protection

Why It Matters — and Where It Falls Short

The SDB offers vital protection during your working years, but it may not reflect your family’s full financial needs. For example, if your salary is $85,000, your SDB would be $172,000. While helpful, this amount may not:

Replace years of lost income
Cover large debts like a mortgage
Fund education goals or long-term care for dependents

Tip: Think of the SDB as a base layer of coverage. It gives you immediate, low-cost protection, but not necessarily the full security your family might require.

What Happens After You Retire?

When you retire, your coverage typically drops to a flat $10,000, unless you opt to maintain part of your benefit by paying a small premium. This reduced amount is often intended to help cover final expenses, not long-term family support.

Note: If you want to maintain meaningful coverage beyond retirement, you will need to arrange separate life insurance in advance. Once you retire, qualifying for new insurance becomes harder and more expensive.

Should You Supplement the Supplementary?

Whether or not the SDB is enough depends on your situation:

If you are early in your career and single, it may be enough for now.
If you have dependents, large financial responsibilities, or a long time to retirement, it likely leaves a gap.
If you want to lock in long-term protection regardless of your job or retirement timeline, individual coverage is essential.

The federal benefit is generous compared to many private-sector group plans, but it is still meant to complement, not replace, your personal planning.

A Valuable Starting Point, Not a Complete Plan

The Supplementary Death Benefit in Canada is a strong advantage for public servants, offering peace of mind at a low cost. But it should be seen as one part of your broader protection strategy. By understanding what it provides, and what it does not, you can make more informed decisions about whether to add individual term or permanent insurance as your life evolves.