If you’re planning to switch jobs, part of the process is considering what happens to your benefits when you leave. This includes your life insurance policy.Typically, you do lose your employer-provided life insurance when you leave a job. The policy is technically held by the employer, while employees are the group of people that can be insured. Therefore, you’re only eligible to be insured when you’re part of that group, so leaving your job disqualifies you from coverage. When you switch jobs, your options for your life insurance policy are usually to:
Cancel the policy or let it lapse.
This is the most common outcome. Because most group policies will automatically cancel when you leave the job, you don’t usually need to take any action for this option.
Transfer the policy to your new role or see if you can convert it to an individual policy.
These options are possible, but not likely. And, even if you’re able to transfer or convert your policy, you’ll likely be subject to higher rates. Considering group life insurance policies through work usually don’t offer the coverage needed to supplement your income, it typically isn’t worth it to pay the higher amounts for inadequate coverage.
In this article, we’ll help you understand what happens to your life insurance when you leave a job and what options you have to stay covered once you’re in your new role.
Should you get life insurance through your new job?
When you start your new role, you may choose to enroll in life insurance provided by your new employer. There are both pros and cons to getting life insurance through your new job. The main advantages of employer-provided life insurance are that it’s typically free or subsidized by your employer, and you don’t have to undergo a medical exam or screening questions. However, because group life insurance tends to be “one size fits all” and less customizable than individual policies, the policy offered by your new employer might not provide enough coverage for your needs.
Should I just buy life insurance on my own?
There are scenarios where employer-provided group life insurance may not be enough coverage or the right fit. In this case, you may choose to buy life insurance on your own.This option gives you more control over the type and amount of coverage. If you choose a term policy, you get to pick the length of term that works best for you, whether that’s 10, 15, 20, 25 or 30 years. If you choose a permanent policy, your coverage will never expire, and you’ll have the advantage of the cash value component. The cash value component can be used as a savings account, which can come in handy for future expenditures like helping fund a child’s college education or starting a small business. When you buy your own life insurance, you also have the benefit of not worrying about losing the policy if you switch jobs again in the future. The policy goes wherever you go, so to speak, and you don’t have to worry about lapses in coverage.
Switching jobs and need help finding life insurance? Let SelectQuote help find the coverage that is right for you.
There are several decisions to make about your employer-provided life insurance policy when you switch jobs so that you can maintain coverage. SelectQuote’s experienced licensed insurance agents can help you find the right life insurance coverage for your needs and budget. In just minutes, we can search the trusted carriers we work with, saving you time so you can focus on starting your new role with peace of mind that your loved ones will stay protected.
