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Can I Continue an Employer Sponsored Life Insurance Plan if I Leave the Company

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Frequently Asked Questions

Employer-Sponsored Life Insurance

Employer-sponsored life insurance provides a financial benefit to an individual's designated beneficiary, person(s) chosen by insured, if the policyholder dies. For the first two years of coverage, death by suicide normally precludes payment of the life insurance benefit.

Employers allow enrollment in this coverage during specific time periods. These periods may be called by different names, such as initial enrollment, open enrollment, or open season.

If an employer offers this coverage, there are a minimum number of hours an employee is required to work per week to obtain and maintain eligibility for benefits, called an Active Work Requirement. Employers and insurers determine this time period.

If you meet the Active Work Requirement (described in question #2) you will be required to work for the employer for a certain period of time prior to becoming eligible to enroll in benefits. This may be called a Service Wait or Eligibility Waiting Period. This time period may be different for each type of benefit offered by the employer, such as long-term disability and health coverage.

You may be responsible for no cost, a percentage of the cost, or the amount associated with the cost of the coverage that is above what the employer elects to pay. This is determined by employer agreements with their insurance companies. Your employer, Human Resources department or personnel staff can explain these benefit details.

Employers offer two basic types of life insurance coverage:

  • Term life and
  • Whole life.

Most employers provide term life insurance for their employees with a specified dollar benefit, or a multiple of salary benefit. If the employer sponsors whole life insurance, the employee usually will pay the premiums for this coverage.

After the service wait, the first time an individual is eligible to enroll in group benefit programs is called the Initial Enrollment Period. The initial enrollment period is the best time to enroll if you have a new diagnosis considered to be a pre-existing condition. During the initial enrollment period, your medical history is not subject to review (called medical underwriting). However, pre-existing condition exclusions may limit or delay the use of coverage.

A medical condition is considered a pre-existing condition when an individual received treatment, such as consulting a medical provider or being prescribed medication, within ten years before enrollment in group coverage.

You will be limited to enrolling up to the Guarantee Issue amount of coverage. This is the maximum amount of coverage available to an individual during the Initial Enrollment Period that does not require proof of good health. For example, an individual may obtain guaranteed issue amount coverage of a set dollar amount or multiples of his/her annual salary with higher benefit amounts requiring proof of good health.

You will need to continue to meet the Active Work Requirements, which means working the minimum number of hours to maintain eligibility for benefits. You may not be able to continue meeting the active work requirement. In these cases, you may be eligible to continue coverage through converting policy to an individual plan. If you are not able to continue because of disability, many life insurance policies allow you to continue coverage at no cost through a provision called waiver of premium.

No. There are no limits on what you own or have in the bank for this coverage. It is an insurance program based on premiums paid through an employer.

Yes. Many employer-sponsored life insurance plans have a provision, called waiver of premium, that may continue your coverage at no cost to you if your disability prevents you from working while insured.

Life insurance is coverage if an individual dies for any reason (with the exception of suicide during the first two years of coverage). Accidental death and dismemberment coverage will only cover death due to accident or covered dismemberment injuries.

You will need to continue to work the minimum number of hours to maintain eligibility for benefits called an Active Work Requirement.

No. Immigration rules that should be considered relate to your legal residency status and whether you are legally authorized to work in California.

If you leave employment, you have 30 days to convert the policy from group to individual coverage. You would then pay the full premium for coverage. If you change jobs and your new employer provides life insurance, you will be eligible to enroll up to the guarantee issue amount of coverage during the initial enrollment period.

Some employers may offer health coverage, dental, vision and long-term care coverage that is in addition to employer-sponsored life insurance.

Whole life insurance has a savings feature that can affect eligibility for Medi-Cal (Medicaid) and/or Social Security's Supplemental Security Income program (SSI). Term life usually does not have a savings feature.

Learn more

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Source: https://ca.db101.org/ca/situations/newlydiagnosed/faq3.htm

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