What Happens to Group Life Insurance When I Retire?

James Duncan

James Duncan is a Life Insurance Advisor at Life Insurance Canada.com.

Employer Life Insurance

Picture it… You are 65 years old and you have finally reached the end of your working life. On your last day at work there’s a party where your friends all wish you the best, maybe share some old stories and a cake. You pick up your personal belongings and head out of the office for the last time as an employee. You are retired! All of those years saving in your RRSP’s and pensions, now it’s time to start spending that money. Travelling, relaxation, time with family. All of these are things that people look forward to in retirement. One thing that isn’t always considered though is, what happens to your group life insurance once you retire?

This is true of all of the benefits that you had with an employer… Once you no longer work there any longer, the benefits that you once had stop. Your life insurance coverage ends the day that you retire. The same way that you can’t run a dental claim through when you don’t work there anymore or have your medications covered by insurance. Your employer’s group life insurance coverage does not pay out if you die after leaving your employer as it has expired.

Depending on your age and employer group plan, you may be given the option to “convert” the life insurance portion from your group benefit insurance plan into a personally owned life insurance policy (e.g. term life insurance or whole life insurance). You need to understand how this works.

In many cases, the conversion option allows you to purchase an individual life insurance policy that provides coverage outside of your employment up until you reach age 65. If you are still working and are older than age 65, the conversion option to allow you to purchase an individual life insurance policy most likely won’t exist.

In a nutshell, what happens is that if you have relied on your group life insurance benefit as your life insurance plan you will need to figure out how to replace any coverage that you need with something that you own personally. It is a conversation that we have with people all the time. The sooner that you are able to ensure that you have a personally owned life insurance policy in force, the lower your rates will be and the quicker you will provide yourself and family with peace of mind.

Summary

Unless you plan on working until the day you die your group life insurance should not be your only insurance plan. It makes a nice bonus if something does happen but don’t rely on it solely for your life insurance coverage.

Own something personally outside of the group plan that protects you based on your needs. Please contact us if you have any additional questions or request a quote.