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.