Today, many employers provide life insurance protection to their employees under group life insurance as part of the employee benefits program. As an employee, you get coverage at little or no cost. A group life insurance policy covers all the employees under a single plan, and the employer usually deducts the premium from your monthly salary. It does not cost more than a couple of thousand Rupees, and you get coverage for as long as you remain employed with the company.
So, what happens to your employer’s life insurance policy after you retire or voluntarily leave the job? Well, in most cases, when you retire or switch jobs, you lose the coverage, and you no longer have insurance protection. However, you can avoid losing the insurance coverage after retirement by converting group life insuranceinto an individual policy.
Convert the group life insurance into an individual policy
When you resign or retire from your company, depending on the terms and conditions of the group life insurance policy, your employer may give you the option to continue with the coverage by converting it into an individual insurance policy. If you opt for this choice, you must pay the premium for the rest of the policy duration from your pocket and continue enjoying the
Insurance protection. Many people choose this option, which is a cost-effective way to protect their family from financial distress after their demise.
How to convert your group life insurance into individual policy?
If your employer allows you to convert the group life insurance plan into an individual policy, you must remember the following things.
As per Insurance Regulatory and Development Authority, an individual covered under the group life insurance policy can convert the employer’s life insurance into an individual policy with the same insurance company after completing the necessary formalities. Regardless, the insurer has full discretion on whether to accept the conversion or not. Also, the insurer will have full control over the new individual policy’s terms and conditions and the premium amount. After one year, you can use the portability right to switch to another insurance company.
If you want to convert the group life insurance policy to an individual policy, you must notify the concerned insurance company at least 45 days before the policy’s expiry date.
Some insurance companies may ask you to undergo a medical check-up to assess the risk they will be covering before converting the group life insurance policy into an individual plan.
Generally, in group life insurance policies, there are no waiting period. However, after you convert it into an individual policy, there may be a waiting period before you can file a claim.
Do you need term insurance cover after retirement?
Many people feel that they don’t need insurance coverage after retirement. If you too think the same, you must know that a term insurance cover is necessary always irrespective of whether you have retired or not. It helps you secure your family’s financial future after you are no more. Here are a few other reasons why term insurance is necessary for you after retirement.
A term insurance policy gives you a financial cushion for your spouse by providing a death benefit. You may have availed of a loan during your working years. In the event of your untimely demise, your spouse may have to bear the burden of repaying the loan and may face financial hardship. But, if you have term insurance coverage, your spouse can use the pay-out they may receive from the insurer to repay the loan.
After retirement, you may want to leave a legacy behind for your family, right? And the best way you can do that is by naming your children or grandchildren as the nominee. In the event of your demise, they can use the death benefit to meet their needs.
If you continue to work even after retirement and you have a dependent spouse or children, you must definitely have term insurance coverage. After your demise, the term insurance benefits can provide financial stability in their lives.
Thus, you must not depend on the life insurance policy offered by your employer. It is better to have an individual policy and continue it even after you retire so that you can breathe easy knowing that your loved one’s future is financially secure.