How to Convert Your Group Life Insurance to an Individual Policy
By Krista DeKuyper | March 7, 2025 |
Group life insurance, typically provided by employers, is a valuable benefit for basic life insurance coverage. However, depending solely on group life insurance won’t always be the most advantageous approach for long-term financial planning. Many individuals under group life insurance find themselves seeking more personalized coverage to fulfill their specific wants and needs. If you are looking to extend your coverage, understanding how to convert your group life insurance to an individual policy is the key step to getting started.
Limitations of Group Life Insurance
While group life insurance provides essential coverage, it also has several limitations:
- Limited Coverage Amount: Group life policies offer a standard coverage amount, but not much more beyond that. Many will find that the standard group coverage does not adequately meet their financial needs. You’ll usually need more extensive coverage for dependents or significant debts.
- Lack of Customization: Group plans do not typically offer customization options, meaning policyholders cannot tailor the policy to fit their individual circumstances.
- Employer-Controlled: Relying on a group life insurance policy comes with significant risk, as employers can discontinue or change the plan’s terms at any time. Since the policy is tied to the employer, loss of a job or a career change will result in the loss of coverage.
- Age and Health Considerations: If you decide to keep your group policy, coverage will end when you leave the group. Due to this, you may face higher premiums or even be denied coverage for an individual policy later due to new health conditions as you age.
Why Convert Group Life Insurance to an Individual Policy?
Is it worth it to convert your group life insurance policy to an individual policy? One benefit of an individual policy includes continued coverage that you can rely on. Unlike a group life insurance policy, an individual policy will stay intact regardless of your employment. This is essential if you plan to eventually transition between jobs or retire.
Additionally, without an employer to control the policy’s terms, you will now have full control over your policy and what you can receive from it. With an individual policy, you can customize coverage options and amounts to better align with your financial goals and family’s needs.
If you’re at a younger age and in good health, an individual plan will help you lock in a favourable premium rate. Converting while healthy is a strategic route that will help you save more in the future.
The Process of Converting Group Life Insurance to an Individual Policy
To convert your group life insurance policy to an individual policy, follow these steps:
- Check Your Eligibility: Review your group life insurance plan documents to determine whether conversion is an option. While some providers offer conversion, others don’t. If the provider does not offer conversion terms, you will need to look for another provider. Most group policies include specific provisions for converting to individual coverage.
- Contact Your Insurer: Reach out to the insurance provider that manages your group life policy. Request details about the conversion process, including eligibility requirements, paperworks, and potential waiting periods.
- Choose the Right Individual Policy: Assess different individual life insurance options available to you. Get started with a HealthQuotes Insurance Agent to help you compare policies and find the one that offers the coverage, benefits, and premium rates that fit your needs.
- Complete the Required Forms: Fill out the necessary application forms to initiate the conversion process. Be prepared to provide information about your health and lifestyle.
- Review and Sign Your Policy: Once converted, carefully review the terms of the new individual policy and confirm that the coverage meets your expectations. Take the time to assess how premiums, benefits, and other terms compare to your former group policy.
Things to Consider Before Converting Your Group Life Insurance
- Group Life Insurance Portability: Portability is not always an option, and it’s important to be aware of that before initiating the conversion process. If not convertible, you’ll need to start a brand new policy.
- Health Questions: During the conversion process, some life insurance providers will require you to answer health questions and provide medical information. This isn’t always the case, as some will allow you to convert directly, but it’s an important aspect to keep in mind.
- Cost Comparison: Before committing to a conversion, compare the premiums and benefits of other individual policies to your current group policy. Don’t let yourself become a victim of tunnel vision, as other providers can have less costly options that are more valuable to you.
