How To Financially Prepare For A Sudden Job Loss In Canada

We typically tell clients: aim for 3 to 6 months of essential living expenses. That means rent or mortgage, groceries, insurance premiums, loan payments — the must-haves.

If you’ve got a family or you’re the sole earner, aim closer to 6 months. And no, it doesn’t have to happen overnight. Start small. Even $100 a month into a high-interest savings account or TFSA can build momentum fast.

Yes — if you have the right plan.

Some Loan Protection Insurance Plans cover payments like your mortgage, car loan, or credit card minimums for a set number of months (usually 6 to 12) if you lose your job involuntarily.

But you’ve got to check the fine print:

• Is job loss included, or just disability/life coverage?
• Is there a waiting period before it kicks in?
• How much of your payment does it actually cover?

We’ve seen clients stay afloat just because they had this in place — and others stressed because they assumed they did, but didn’t.

Start with the essentials:

• Life insurance — especially if you have dependents or debts
• Critical illness insurance — it pays a lump sum if you’re diagnosed with a serious condition while unemployed
• Disability insurance — if you plan to freelance or consult post-layoff, this is your backup if you can’t work due to injury or illness

Most people cancel these, thinking they’re saving money — but we’ve seen that decision backfire too many times. The coverage you cancel today might cost double to replace later.

Severance is a lump sum or pay-in-lieu your employer may offer when they terminate your role. EI is a government benefit you must apply for. It pays up to 55% of your weekly earnings (to a max) if you qualify based on hours worked.

Heads up: EI won’t start paying out until after your severance period ends. So don’t count on immediate cash flow unless you plan for that gap.

Sometimes, yes. But you’ve got to ask before you fall behind.

Many lenders offer:

• Temporary deferrals
• Modified payment schedules
• Or even formal loan modifications

The sooner you call, the more options you’ll have. Waiting until collections start or you’ve missed a few payments? That’s when things get harder — and more expensive.

It depends on your:

• Age
• Loan amount
• Type of protection (life, disability, job loss)

For example:

• A $300,000 mortgage might cost $30–$60/month for life and job loss coverage
• A $20,000 car loan may add $10–$15/month for basic protection

Always ask:

“What are my current Loan Protection Insurance costs, and what exactly do they cover?”

It’s one of the most overlooked lines on your monthly statement.

Yes — if needed. These are smart, long-term tools, but they’re optional when cash is tight. Pause contributions, but don’t withdraw unless absolutely necessary (especially from your RRSP, which has tax consequences).

Use the pause to preserve cash flow, then plan a catch-up strategy once you’re back on your feet.

You can — but it gets harder.

Some insurance products (like Term Life or Disability Insurance) require you to have a stable income or employment to qualify. Others may allow coverage, but at a higher premium or with limited benefits.

That’s why we always say: get insured while you’re working. It’s faster, cheaper, and easier.

This happens more than people expect. Maybe you didn’t work enough insured hours, or you’ve just returned from maternity leave.

In that case, look into:

• Provincial assistance programs
• Community or nonprofit support for short-term needs
• Freelance or part-time gigs to bridge the gap

And revisit your emergency fund and insurance coverage to avoid slipping into credit dependency.

There’s no one-size-fits-all, but once your paperwork is sorted (severance, insurance, EI), it’s smart to start networking within the first 2 weeks.

That doesn’t mean you need to rush into the first offer, but staying visible keeps your momentum up. Many clients land roles through quiet conversations that started before they even posted “Open to Work” on LinkedIn.