Group life insurance is a great perk for employees of a company, but what happens if you leave or get fired? That’s where portability and conversion come into play.

Portability refers to moving or porting your group life insurance policy to an individual policy of your own. This usually involves term insurance and it may require a medical exam.

Conversion refers to the ability to change your group term policy to an individual permanent cash value policy, like a whole life or universal life insurance policy. This may also require a medical exam.

When to Port or Convert

Typically porting and converting your group policy to an individual policy needs to happen within one month of leaving your employer.

Group plans are rarely ported or converted for a couple of reasons:

  1. It’s a time sensitive option and it will often expire without people even knowing they could do it.
  2. You’ll likely be older when you try to convert or port it and that means the rates are significantly higher because you are older. At that point, you may not be able to afford it.

While the concepts of portability and conversion sounds nice, most employees don’t do it.

When deciding what to do with your group life insurance policy, find out from your employer:

  • How much it is to port and/or convert
  • If you can get a better price with an independent insurance agent

The Bottom Line

If you have group life insurance and plan to stay with your employer, that’s great, but be sure to have your own individual policy too, that way you have guaranteed protection no matter where you choose to work. Then you don’t have to worry about if you leave your employer, how old you will be at that time, and what kind of health you’ll be in.

What is disability insurance?

Disability insurance provides partial income so you can pay your bills if you get too sick or injured to work. It’s simply income or paycheck protection.

Disability happens more often and to more people than you may think. Disabilities that are caused by illnesses like heart disease, arthritis, and cancer are more common than disabilities from injuries.

Short-term vs. long-term disability insurance

Short term policies help you right after an incident and will replace a portion of income for about 3-6 months. Long-term policies will generally begin six months after the disability and can last years or even until retirement age. Your long-term disability plan will typically pay between 50% and 70% of your pre-disability earnings up to a maximum.

When will I receive benefits?

After you’ve met the definition of a disability in your policy, you must fulfill your elimination period. The elimination period is the waiting period or length of time from when your doctor diagnosed the disability to when you can start collecting from the disability insurance policy. After the elimination period has been satisfied, you’ll start to receive your monthly benefit.

How long do benefits last?

The benefits last until you can go back to work or for the number of years stated in the policy. Some people choose to buy policies with a benefit period that lasts 5 years, while others choose a benefit period that lasts until they are retirement age.

The Bottom Line

Disability insurance is income protection. People don’t plan on becoming disabled, but if you get in an accident or get too sick to work, disability insurance can be very meaningful.

What is an independent insurance agent?

Independent agents are independent of any one insurance company.  Unlike a captive or direct insurance company, who only offers their own proprietary products, we don’t have to try and fit you into the one offering available.  Instead, we find the right company and policy for you based on your individual needs.

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Your health and age are the biggest factors in determining if you qualify for long-term care insurance (LTCI). Compromised health is a reason many people don’t qualify, but other important factors are that they are applying at the wrong time or with the wrong company based on their health and age.

Insurance companies look at health issues that increase a person’s risk of needing care. They won’t blindly take a risk, so they require medical underwriting.

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Life insurance companies offer a variety of riders or policy add-ons to customize your insurance coverage. Some come at no additional cost and are built into the policy, while others have an additional cost.

Term Rider and Term Conversion often get confused, so let’s review the differences.

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If you have a disability insurance policy, become disabled and can’t work, you’ll be grateful you have disability insurance to replace a portion of your paycheck.

An important thing to consider is “Are my disability benefits I receive taxable?”

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Life insurance companies offer a variety of riders or simply policy add-ons to customize your insurance coverage. Some riders come at no additional cost and are built into the policy, while others have an additional cost.

AD&D

Accidental Death and Dismemberment is also known as AD&D. It provides an extra death benefit amount, oftentimes double, if death occurs because of an accidental injury or if you lose a limb in an accident. For example, if you have a $1,000,000 life insurance policy and were to die because of an accident, your policy could pay out $2,000,000.

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Disability insurance is protection for your paycheck. There are many riders (policy add-ons) available to customize your coverage. The future increase option (FIO) is a popular rider of a long-term disability insurance policy.

It’s also known as future purchase option, guaranteed increased option, guaranteed purchase option, and guaranteed insurability option.

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