If you have life insurance cover attached to your employment, you must find out what benefits you are covered for. Understanding your entitlements on this type of “group” insurance policy is vital. The day you choose to change employer of your own accord or you take a sabbatical year, how can you ensure you have some form of protection between jobs or while taking some time off? For most employees, they are either unaware or do not see this as important.
The “group” life insurance policies arranged by employers generally cease to apply once an employee is no longer under their employment. This means that your life insurance cover will cease to apply the moment you are no longer an employee. In this instance, you will be left with no cover unless you have other life insurance policies in place.
This type of “group” policy is quite convenient for employees who have existing medical history, meaning that they are usually not required to be medically assessed before the insurance company provides them with some level of cover. This is possible as most “group” policies have a clause called Automatic Acceptance Level or Free Cover Limit (same application but name different in different country). These limits allow employers to grant cover to all eligible employees, for example if the employer determines eligible employees are all permanent full-time employees, therefore only permanent full-time employees are eligible for insurance cover from their first day on the job provided they are actively performing their duties, up to these limits. Automatic Acceptance or Free Cover Limit is not available under an “individual” policy, meaning that the individual must undergo a medical assessment before the insurance company can decide to offer any cover. Most “group” policies come with some form of Continuation Option clause. Exercising this Option allows employees to convert their existing “group” cover to “individual” cover without the need of a medical assessment. It also allows employees to continue their cover even after leaving their employment. However, the cost will be adjusted to an “individual” basis which is always higher than a “group” policy.
