Having group life insurance through your job is certainly one of the top excuses for not buying a personal life insurance policy. After all, if you already have it, why buy more. And group insurance is generally sooo cheap.
Well, allow me to throw a rock in that placid pool of thought and cause a few waves. Changing jobs is statistically happening more frequently. It’s not like our parent’s day when you got a job and worked it from then until you retired or died. I think I read somewhere that the average working person who has a job that would be eligible for group benefits, changes employment 7 times over their working lifespan.
Two things can happen to your group life insurance when you change jobs. Most group life insurance policies, which are term insurance, are convertible to either whole life or universal life policies if you leave employment. Very few of these conversion options would fall into the category of what would be called an attractive offer. Generally they are overpriced and under guaranteed. So your choice becomes either accepting a bad deal, quickly finding another job with a comparable group life plan, or buying a personal policy.
The other thing that can happen with group coverage if you leave employment is that it simply ceases. Most are kind enough to give you 30 days, a grace period of sorts, but then it simply goes away.
Especially in today’s market when an independent life insurance agent can find you term life insurance at extremely competitive prices, a prudent and reasonable thing to do is to carry a personal policy all of the time and consider group benefits to be the frosting on the cake, not the cake itself. Then, if you change employment you have ongoing coverage. Your family is never put in a position of being left with nothing if you pass away unexpectedly.
Please don’t misunderstand. I advocate gobbling up all the the cheap group benefits that are offered. Just remember they aren’t guaranteed. Your employer could decide to cut benefits. You could quit or be fired and be forced into a bad conversion option or be left with no option at all.
This post is somewhat dated. Life insurance underwriting is changing and evolving continually. For more updated information check out some of the key word links. If you have a specific question or topic you need information for do a search. If you don’t find the answers you need contact me and we’ll make sure you get the information that is important to you.