Some companies offer their employees a basic life insurance which is typically free, but the coverage amounts tend to be lower than individual policies. These life insurance policies provided by an employer are ususally referred to as “Basic Group Life.” Many Americans are covered by these type of basic workplace plans versus an individual plan. As such typical coverage amounts are usually low and will range from $25,000 to up to a multiple of your annual salary. Since this coverage is generally guaranteed, meaning you won’t need to take a medical exam or answer health questions to qualify it is very popular and there’s no reason not to accept it. All you must do is sign up, and typically enrollment is automatic within a couple of months of starting your employment.
If you are offered such insurance coverage, the first thing to do is to say “yes” to any free basic group life insurance offered! Next, be smart and enquire about the cost of adding supplemental life insurance if available through your work. Then check to see what you can find on your own through a professional insurance agent. If you can find a comparable deal on your own, then buying supplemental coverage through work may not be worthwhile, even if the cost of an individual policy is slightly higher, it’s still a better decision because you can take your individual policy with you if you leave.
Leaving your job or accepting another position with a new employer can be problematic with employer provided group insurance. Can you take your life insurance policy with you? Since benefits are offered to all employees with the employer paying part or all of the policy’s premium, your former employer will likely not be required to continue to pay for your coverage once you leave.
However, some plans do vary. If you can keep your policy but are unable to port your coverage to your new employer, you may be able to convert your group policy to an individual policy – if your plan allows. Since you’ll no longer be on your company’s plan, you’ll be responsible for paying the entire premium personally.
In most cases you may have no other options and the life insurance coverage through your group plan will end when you leave your job. That means applying for new coverage at your new job or individually from a life company that will be based on your current age and health condition. Although this may appear to be a significant problem you may discover that certain health conditions will make it difficult to find policy that fits your financial budget, or even make it impossible for you to qualify for coverage. Therefore, we recommend that even if you have coverage through your employer, it is always a good plan to add additional life insurance that is independent of what you have through your employer. That way, the policy you have is yours no matter where you choose to work. To find out more information on individual plans or to compare your employee coverage speak with your professional life insurance agent.