Group-Life Conversion: Individual Polices are Best

Insurance broker
When leaving the group, it’s
best to strike out on your own.

Group-life conversions are available to employees that have a group-life coverage policy and are terminating employment.

Most group policies allow the insured to convert up to two times their salary, or a maximum of $200,000, of coverage to an individual policy without a medical. On the surface, this seems like a good deal. After all, the insured doesn’t have to worry about the hassle of a medical. But these policies really only provide value to individuals that are hard to insure, i.e. someone with significant health and or lifestyle issues. The reason for this, life insurance companies build a buffer into the premium on a group-life conversion.

In fact, the premium on a group-life conversion is often two to three times what an equivalent individual life policy will be. Additionally, group-life policies can generally only be converted into a limited number of plans. Most companies offer a one year term policy where the premiums and coverage are in place for one year. A term to 65, where the coverage is available to the insured 65th birthday, a whole life policy or a participating whole life policy with a built-in cash value component.

The features of the group-life conversion contract vary from one company to another, so be sure to check with your broker or with the insurance company directly.

For a comparison of group-life conversion rates versus individual life insurance rates, please contact us at 1-866-899-4849 or visit our Instant Quote Page.

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