What Happens to Life Insurance When You Leave a Job?

If you decide to leave your job, you may consider alternatives to life insurance conversion. While converting group life insurance to individual life insurance can work for some, complications may often encourage you to pursue a new plan instead. 

Getting life insurance through work is relatively standard. And while these plans are generally less expensive for individuals, they come with some barriers. For starters, you may have less choice in the type of policy and coverage amounts. But perhaps more importantly, the policy usually won't follow you if you leave your job. Instead, it becomes necessary to either convert your policy, port it, find a new one, or go without it.

Before deciding, it's vital to know if your current policy is portable, convertible, or neither. Life insurance portability vs. conversion determines whether you can take your policy with you (portable) or if you'd have to convert it to keep it (convertible). 

What's available can depend on state laws and individual insurance company policies. When signing up for life insurance with an employer, you can check the paperwork for a conversion provision in group life insurance policies. You have built-in life insurance policy conversion options when this provision is included.

How long does life insurance last after termination?

It's common for people to have around one month to convert their group policy to a personal one after leaving their job. However, this varies between employers. With some employers, the policy ends after the last day you work there. 

To find the specifics of how your group policy works, you may have to check with your employer or research the employee policy handbook. 

When verifying how long your insurance lasts after leaving, it's vital to check for the life insurance conversion period. That'll tell you how long you have to convert your group policy to an individual plan after leaving the job.

Alternatives to converting your group plan

Life insurance is an essential financial safety net to maintain, whether you're the only income earner or part of a dual-income household. While it's often possible to convert your portion of a group policy into an individual plan, it can end up being less expensive to purchase a new one. 

Doing so may also provide more options regarding types of policy and coverage limits. If you decide to convert your policy, and it's permissible, your insurer will have you select from a prescribed set of available options. 

Ethos life insurance policies

Before deciding on a life insurance conversion option, consider some alternatives that may cost you less. Ethos works by offering term and whole life policies to qualifying applicants. While both policies include death benefits and require premium payments, they differ in many other respects. To begin, term plans are simpler and generally cheaper, while whole life is more specialized and often costs more.  

Note that Ethos doesn't offer group life insurance conversion. However, some applicants may save money by purchasing a new policy instead of converting.

Term life

Term life insurance policies are one of the more recommended forms of life insurance. These policies are preset upon creation for a specific duration, known as the policy term. During this time, the policy will pay out its coverage to the listed beneficiaries if the policyholder passes away. 

You must renew these policies after the term is up, or they'll no longer be in force. Consider term life insurance online with Ethos and get an estimate today. 

Whole life

Sometimes, purchasing a new policy is more cost-effective than converting a group plan to permanent life insurance. Whole life insurance policies are a type of permanent life insurance. Permanent life policies can last a policyholder's entire life instead of only a specific term. These plans include a cash value feature as a tax-deferred investment component.  

Once accumulated, this cash value can be used to numerous ends during the policyholder's life. Specifically, this feature can be used to pay premiums, borrow against, withdraw, or increase coverage. Depending on what you do with the cash value, it can alter the size of your coverage and the cost of premiums. 

Start applying for life insurance online today, and see what coverage is available to you.