Group Life Insurance - Portability - Conversion and oh Yah Convertible(?)

What is Group Life?

Group life insurance is a form of insurance where a group, often your employer takes out policies for everyone's benefits.  This is distinct and different from individual term life or whole life insurance.  Often employers allow you one or maybe two times earnings as part of your job package.  Group life insurance is not necessarily only for employers.

But what happens when you leave your job?   This is the problem with group life insurance - what happens when you leave?

Two Ways to Take it With You:

To deal with this issue of leaving, typically either voluntarily or involuntarily - most group life insurers allow you to port or convert your policy.

Portability:

Porting your policy allows you to change your policy into your own term policy.  In general as long as the rate makes sense - this the smart move.

Conversion:

Conversion of your group life policy allows you to change the policy (and take it) to a permanent policy.  This is often a whole life policy but could be a universal policy.

Why Would you Want to Convert?

For those that want a form of permanent insurance conversion can make the most amount of sense. Caution though - whole life insurance policies are much more expensive than term policies - so be careful deciding on this.  And know that with whole life insurance you will be expected to pay that bill each year for the rest of your life.  This may not be desirable.

and Oh Yah - What is Convertible

Not in any way connected with Conversion of Term Insurance. is a convertible term life insurance policy.  Convertible term contracts allow the owner to change the term policy to a different policy during the life of the policy usually to a whole or universal contract.   This can be most appealing for those that are not sure if they will want a cash value policy at some later time.  Again this is with independent policies and not group policies.

Summation:

Group life insurance is a wonderful thing...If you have it feel lucky.  Leaving jobs makes for a difficult decision as to what to do with it.  Convert it, Port it, or Buy your own Policy????