If you’re thinking of changing job roles but are worried you’ll lose your life insurance policy, there may be a way around it. Some insurance policies can be transferred either to your new employer or to a personal policy. This often depends on the insurance provider as well as if there are any changes in circumstance. Find out what options may be available to you if you would like to keep your policy.
Having a life insurance policy through your employer can be a great way to cut the cost of protection. You can get coverage as a multiple of your salary so that you can leave some money to your family if you were to pass away during your employment. But what happens when you leave your job and go elsewhere?
Transferring your policy when leaving the business
If you’re moving to another job who will be happy to offer life insurance as a benefit you may be able to transfer your policy. Typically, if the business uses another provider you may need to get terms from a different provider. If they allow you to maintain the current provider, you can just transfer the policy over and your new company will pay for the premiums.
If you’ve suffered from certain health conditions, this won’t matter if you’re just transferring the policy. It will still have the same start date. However, if you need to apply for another policy from a different provider it may affect the cost of your life insurance. Therefore, it may be cheaper for the business to keep your existing policy.
Some employers offer group life insurance schemes for their employees. These are not normally transferable. Therefore, getting key man insurance or relevant life insurance can help if you think you may move jobs later down the line.
Some employees will provide a different level of cover, so you may need to reduce the amount of cover you have. In this case, you may wish to top up your life insurance with an additional personal policy. You can then ensure that your family are getting enough money to support them.
Converting to a personal policy
With both a group life insurance scheme and an individual policy you may be able to convert your employer-paid life insurance to a personal policy. Relevant life policies can be converted to a personal plan without the need for further medical evidence or underwriting.
You will normally need to give notice to your insurance provider to transfer the policy over. You may need to give around 90 days notice. Check your policy documents and read the terms and conditions on whether you can transfer your policy.
It is important to know that by converting to a personal life insurance option, the policy will not be eligible for the same tax relief as it was when it was paid for by the business. Therefore, an individual policy is likely to be more expensive once it is converted.
Can I keep my life insurance if I go freelance?
If your new role is self-employed, then you may be able to still obtain life insurance. You will not be eligible to receive a relevant life policy. However, if you’re interested in running the policy through your business you may be eligible for key man insurance.
Typically, once you leave your employment your life insurance policy will end. If you apply for key man insurance, you will need to go through the underwriting process once again. However, you could transfer the policy to a personal one. You can do this without the need for underwriting but you don’t receive the same tax benefits.
Advantages of life insurance through your employer
The main benefit of obtaining life insurance through your employer is that the policy is often cheaper. Some policies such as key man insurance and relevant life insurance can be put through as a business expense. They could also benefit from a tax-free payout too.
If you need advice on whether you can keep your life insurance policy if you’re changing jobs, please do not hesitate to get in touch with one of our advisors.