You Can Take it With you!

When employees leave your firm, they may be entitled to on-going life insurance because of their participation in your group plan.  Their coverage can be 'converted' to an individual policy for the same amount, with the employee paying all future premiums.  The advantage to the employee is that this coverage is guaranteed, if the employee applies for it within 30 days of leaving your company.

A converted policy can provide a level of coverage appropriate for retirement.  Conversion benefits also suit some people's circumstances before retirement.  Those who have health issues may not find reasonably priced life insurance, if they can find any at all.  Others may need a life insurance policy with a specific purpose in mind, like those required to keep coverage for the benefit of an ex-spouse, as a condition of divorce. 

But the key to conversion is timing.  The employee's application and initial premium cheque must reach the insurer within 30 days of the end of employment.  After that, the group benefit cannot be converted, leaving the individual to try to find coverage on his or her own.

If an individual leaves your company without being made aware the guaranteed benefit is available, your company leaves the door open to a possible legal challenge down the road.  With that in mind, the Chambers Plan offers a sample letter employers can use.  When an employee declines conversion, he or she signs the letter, acknowledging the offer.  Completed forms are worth keeping with the departed employee's file for a period of time.

Remember, whether or not an individual converts the group life benefit, there's no cost to the employer.  And it's easy to make the offer a routine part of your process when an individual leaves your company.