Do I need travel insurance?
YES! The CIC website states the below. It is definitely a must!
You may be refused entry if you do not have insurance.
How long do I need to get travel insurance for?
You will need to purchase your travel insurance for the duration that you want to stay in Canada. Thus, if you want to stay in Canada for 2 years, you must have proof of travel insurance that lasts the full duration of the 2 years.
The CIC website also points out that if your visa is for 2 years, but you only have travel insurance to cover you for the 1 year, you will only be allowed to stay in Canada for the 1 year, and you will not be able to apply for an extension of your work permit.
Here is the exact text:
If your insurance policy is valid for less than your expected stay, you may be issued a work permit that expires at the same time as your insurance. If this happens, you will not be able to apply for an extension of your work permit at a later date.
You can find this text here http://www.cic.gc.ca/english/work/iec/arrival.asp
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