How to Convert Group Life Insurance

by Jennifer Stewart ; Updated July 27, 2017
Group life insurance conversion to individual life insurance depends on plan type.

Group life insurance provides coverage for a number of people under a single master contract or master policy. Group life plans normally require eligibility for employees to participate, usually in the form of filling out an enrollment card and being issued a certificate of insurance. Unlike individual life insurance, it is the group not the individual that must meet the underwriting requirements of the insurance company. Depending on the type of group life insurance plan offered, individuals who exit the group--or in some cases where a group plan is terminated--may convert or even carry (port) their existing group insurance plan with them.

Step 1

Check the group life insurance plan set up by your employer to determine the type of policy you have. Most group plans offer some type of conversion provision built into the policy. Some group plans offers a type of portable group insurance in which individuals carry the policy with them when they leave their employer. Different limitations and requirements apply, depending on the type of group plan.

Step 2

Convert the group life insurance policy to an individual life insurance policy if the policy has a conversion provision. The provision usually provides only conversion to an individual whole life policy and normally does not require the individual to demonstrate he is insurable. The amount of premium an individual pays for this new policy is determined by his age at the time the policy converts. Because these rates reflect individual whole life rates, they will typically be much higher than group life insurance rates.

Step 3

Carry the existing group term life policy over to an individual term life policy if the group policy is portable. This individual policy will carry the same term life benefit as the group policy and have no cash value amount. Because the rates of this new policy are based on a pool of all ported policies, they will be much lower than individual term rates and more reflective of group term rates.

Step 4

Fill out appropriate paperwork, including an application as well as any product/rate information or electronic request of funds. The employer will usually complete a conversion form for the insured. It is advisable to consult with an insurance representative to fill out the necessary forms. The forms are filed with a notice and first month's premium in advance. The insurance company will then review the request to determine whether the insured qualifies for coverage.

Tips

  • Most often, an individual who exercises a group life conversion option has a maximum time period after policy termination in which to convert her policy. This standard period is normally 31 days from the day the policy is terminated. If the insured dies within that 31-day period, the group policy coverage would still provide a death benefit to the beneficiary.

References

  • "Florida Life, Health And Variable Annuity Study Manual"; Florida Association of Insurance and Financial Advisors; 2007

About the Author

Based in Northeast Florida, Jennifer Stewart has been writing how-to and financial articles since 2007. She holds a bachelor's degree in business administration from the University of West Florida. Her articles have been published on top article sites, and she currently operates three websites and multiple blogs.

Photo Credits

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