Question: “Can I take my life insurance policy with me when I leave my employer?”
Answer: Quite often you can transfer your group life insurance coverage to an individual policy with the same insurance company when you leave your employer. You should check with your employer to see if your group life insurance contract offers a conversion privilege available to all employees who are insured under the employer’s group plan. A conversion privilege will be subject to certain conditions described in the master contract.
You generally have a short time frame — usually a month — after you leave your employer to submit an application.
In some cases, you may be able to convert your coverage to a different kind of individual life insurance that the company offers.
The insurance company usually will not continue any supplemental coverages — such as disability insurance — that may have been included with your group life coverage.
Typically, the rate to convert your group coverage to an individual policy is more expensive than obtaining an individual policy that you could buy on your own if you are healthy and have a a good family health history.
If you decide to convert to a permanent life insurance policy, the premium will be based on your current age and the same amount of insurance that your group policy provides. The premiums must be based on standard or regular rates. No medical exam is generally required. This is especially important if you are not in good health or have a family health history that could impact your underwriting.
If you don’t already have individual coverage and you know you should have coverage but believe you can buy it cheaper on your own, you may want to take advantage of the conversion privilege to bridge your protection until a new policy is in place. Also note that even if you don’t take advantage of a conversion privilege when you leave your company, group life coverage generally continues for 31 days after your last day of work.
Check with your employee benefits administrator or HR manager to obtain specific details that relate to your group plan. Make sure you are aware of when you must submit a decision so you have adequate time to review and understand your choices.