Can Someone Keep Group Life Insurance After They Leave a Job?

Group life insurance is an excellent employer benefit because it lets you get some life insurance coverage for free or at a very low cost. This can be quite helpful if you stay with your employer for a long time.

However, group life insurance generally doesn’t stay with you if you leave your job. So you could lose that coverage if you find a new job, get laid off, or retire . Furthermore, coverage from an employer-provided life insurance policy often doesn’t exceed $50,000 for tax reasons.

Fortunately, there are several options you can get through life insurance companies outside of work. This article will explore three individual life insurance options you can consider to maintain coverage regardless of your job status.

1. Whole life insurance

Whole life insurance is a permanent life insurance policy that covers you for life and comes with a cash value growth component. A part of each premium you pay goes into this component and grows tax-deferred at a fixed rate. Once you gain enough cash value, you can borrow against or withdraw from it. Furthermore, if you surrender the policy, the insurer pays out your cash value minus surrender charges.

2. Universal life insurance

Universal life insurance is another permanent life policy that offers lifelong coverage and a cash value growth component that grows based on variable interest rates. However, this type of policy also lets you pay premiums with cash value once it’s large enough. Universal life insurance typically costs less than whole life insurance but more than term life insurance. So this means it can be a good middle ground.

3. Term life insurance

Term life insurance doesn’t last for life or have cash value, like whole and universal life insurance. Instead, it generally lasts for 10 to 30 years, depending on your choice. Additionally, term life insurance is typically more affordable than permanent life insurance.

According to Forbes, the average healthy 30-year-old male will pay just $30 per month for a 30-year term life insurance policy. However, t hat same individual would pay $360 per month on average for a whole life insurance policy, or 12 times the cost. So, term life insurance can work well if you don’t need coverage for life and want the largest death benefit for your dollar.

The bottom line

Although group life insurance is a nice benefit, it doesn’t always come with you if you change jobs or careers, retire, or get laid off. An individual life insurance policy can make up that gap. Term life insurance can work best if you want affordable premiums and don’t need coverage for your entire life.

Meanwhile, a permanent life insurance policy works better if you want lifelong coverage and cash value. You should consider whole life insurance if you want a simpler permanent policy, whereas universal life insurance may be the right choice if you’d like more features and flexibility. So, consider looking for an individual life insurance policy now. If you do so, you’ll be much more prepared if you ever leave your job.