Key points
- The gap is personal: what you would need, less what you would have. There is no standard number.
- The CPP death benefit is at most $5,000; the 2026 survivor's pension tops out at $803.54 a month under 65.
- If you can't work, EI sickness pays up to $729 a week for 26 weeks, and CPP disability up to $1,741.20 a month, only for severe and prolonged disabilities.
- Work cover often ends with the job, may cover base salary only, and can be taxable.
- Business owners have extra gaps: partner buy-outs, key people, fixed costs, personal guarantees on loans and the tax on shares at death.
What a protection gap is
Three events cause most of the financial damage in a family or a small business: a death, a disability that stops someone working, and a serious illness. Each one creates costs or cuts income at the same moment. The protection gap is simply what would be left unpaid once insurance, savings and government benefits have done what they can.
You will see national surveys quoting the share of families who are "underinsured". We don't repeat them here, because a national average tells you nothing about your own household. A single person with no debts and a family with a new mortgage and two children face completely different gaps, and the only useful number is your own.
What the government safety net pays
Federal programs pay something in each of the three events, and it is worth knowing how much before deciding what else you need. Finvo is not part of the government; each program decides eligibility and payments.
| If this happens | Program | What it pays |
|---|---|---|
| A death | CPP death benefit | One-time $2,500, plus a possible $2,500 top-up for some contributors who die on or after 1 January 2025 (at most $5,000) |
| A death, for the surviving partner | CPP survivor's pension | Monthly, based on the contributor's record; at most $803.54 under 65 and $904.59 at 65 or older in 2026 (2026 amounts) |
| A death, for children | CPP children's benefit | $307.81 a month in 2026 for each eligible child under 18, or 18 to 25 in full-time school (half that for part-time) |
| Short illness or injury | EI sickness benefits | 55% of insurable earnings, up to $729 a week, for up to 26 weeks |
| Severe and prolonged disability | CPP disability benefit | A basic $610.46 a month plus an amount based on contributions, up to $1,741.20 a month |
| Injury or illness caused by work | WorkSafeBC (BC) or WCB Alberta | Wage-loss and other benefits under provincial rules, only when the work caused it |
Put a family's numbers next to that table and the gap usually appears quickly. A household that relies on a $90,000 salary would lose about $7,500 a month of gross income; the survivor's pension replaces a fraction of that, and EI sickness ends after 26 weeks. Our EI calculator estimates EI benefits, and the government benefits hub covers other programs.
The common gaps
Life cover that is too small, or tied to a job
Many people's only life insurance is the group cover at work, often one or two years of salary, which usually ends when the job ends. A mortgage, young children or a partner who earns less can make that far too little. Our life insurance guide explains term and permanent cover and how people think about the amount.
No personal disability cover
A long disability can cost more than a death, because the person still needs to live while their income stops. Group disability plans often cover base salary only, up to a plan maximum, may switch to an "any occupation" test after two years, end when you leave the job, and are generally taxable if the employer pays the premium. The self-employed usually have nothing at all unless they buy it. See our disability insurance guide.
No cushion for a serious illness
Critical illness insurance pays a lump sum on diagnosis of a condition the policy lists, whether or not you can work. People use it for costs that income replacement doesn't cover: travel to treatment, a partner taking unpaid time off, help at home, or changes to the house.
Counting on government programs
The table above is the floor. EI sickness lasts 26 weeks at most. CPP disability is only for disabilities that are severe and prolonged and stop you working regularly at any job, and approval takes time. Workers' compensation pays only when work caused the injury or illness, which leaves out most illnesses and injuries at home.
No protection for the business
For business owners the gap extends to the company:
- No buy-sell plan. If a co-owner dies or becomes disabled, who buys their shares, at what price, and with what money? A shareholders' agreement answers the first two; insurance is one common way to answer the third.
- No key person cover. If the business depends on one or two people, losing one can cost revenue, clients and lenders' confidence at once.
- No way to pay fixed costs. Rent, staff and loan payments continue while the owner can't work; business overhead expense insurance is designed for this.
- Personal guarantees. Business loans the owner signed for personally can fall on the family if the owner dies.
- Tax on shares at death. Shares of a private company are generally treated as sold at fair market value when the owner dies, which can create a large tax bill. Our estate planning guide and corporate-owned life insurance guide explain it.
Working out your own gap
A first estimate needs only a sheet of paper. A licensed insurance agent can do a formal needs analysis later; this tells you whether it is worth doing.
| Step | What to list |
|---|---|
| 1. Debts | Mortgage, car loans, lines of credit, student loans, business loans you signed for personally |
| 2. Final costs and tax | Funeral, legal and probate fees, and the tax on your final return (investments, rental property, shares of a company) |
| 3. Income | How many years of your after-tax income your family would need, or how long you could go without your own income if disabled |
| 4. Goals | Children's education, care for a parent, keeping the family home, a gift to charity |
| 5. Less what you have | Savings and investments, group cover at work (and whether it is taxable or ends with the job), individual policies, government benefits |
| 6. The gap | Steps 1 to 4, minus step 5 |
A self-employed parent. A self-employed designer earns about $80,000 a year, has a partner and one child, and has no work cover. If an injury stopped them working for a year, EI sickness would pay nothing unless they had registered for EI special benefits in advance, CPP disability would not apply to a one-year recovery, and workers' compensation would not apply to an injury away from work. Their gap is close to a full year of income, plus the business's fixed costs. Round, illustrative numbers.
Then the other tasks that close gaps without buying anything: an up-to-date will and powers of attorney, beneficiary designations that match the will, an emergency fund, and for owners a shareholders' agreement. Those are for your lawyer; the tax estimates are for your accountant.
Where Finvo fits
We work out the tax side of the gap: the tax your estate would owe on investments, property or shares of your company, whether your disability benefits would be taxable, how premiums paid through a corporation are treated, and how insurance fits your tax-side financial plan and your business's risk management.
Finvo itself does not sell insurance. If you need insurance advice, we can connect you with a licensed agent from our partner network; the agent advises on products and coverage, and we cover the tax side. Insurance and other specialists are joining Finvo as contractors, so a group of consultants can work on your file together and you don't have to go from place to place. How it works.
This guide is general information, checked against Service Canada and the Financial Consumer Agency of Canada on 30 Oct 2026. Programs and policies have their own rules; it isn't insurance, tax or legal advice for your situation.