What happens to my life insurance policy after I leave my job?

Employer life insurance is generally provided in the form of group life insurance. The employer pays some or all of the premiums on the policy, which is typically written for values of $100,000 or less. When you are terminated from the company, the employer is no longer obligated to pay your premiums, and you are technically no longer a member of the group the policy is written for.

Upon termination, the insurance company or your company's human resource department will contact you with your options regarding the insurance. Your options, in this case, are to convert the policy to an individual life insurance policy, cancel the policy, port the policy to another group plan, or allow the coverage to lapse. Unless you are provided with other options, these are the choices you have to choose from.

Converting the policy means that you keep the insurance policy, but convert it to an individual policy. Your premiums will increase, because the employer is no longer paying a portion of the premiums, and you may have other fees that need to be paid as well. Once the conversion is complete, the policy belongs to you, and you are responsible for making the full premium payments.

Porting the policy means that the policy remains in effect but is transferred to another insurer or, at the very least, to another life insurance plan with the same company. As with conversion, there may be fees or other costs associated with the porting of the policy. Once the policy has been ported, it will continue to work the same as did with the previous employer. If your new employer does not offer life insurance premiums as a job benefit, this option may not be available.

If you choose to terminate the policy or allow it to lapse, you simply lose the coverage. In some cases, you may be eligible to receive some of the policy value, specifically the accumulated cash value, but this is generally the exception, not the rule. Once the policy has terminated, you will need to find a new life insurance provider and secure coverage of your own, either as an individual policy or as part of the group policy being offered by your new employer.