Life Insurance After Leaving a Job: What Happens When Your Employer-Provided Life Insurance Coverage Terminates?

When individuals are covered by group life insurance plans provided by employers, they enjoy low premiums and do not have to worry about remembering to make a premium payment on time because premiums are usually withdrawn from their paychecks.

There are many other advantages to group life insurance coverage: help from employers’ Human Resources or benefits departments, open enrollment periods, ease of increasing or decreasing coverage, dependent life insurance coverage. If an employee has a question about her benefits, she may simply speak with her employer’s Human Resources department and get answers or log into her benefits portal and review the coverage. 

One of the main disadvantages of group life insurance coverage is the lack of control. When your employment terminates, your group life insurance coverage terminates as well. If you leave your employment, you need to act fast to understand your options and ensure your coverage continues. Unless you take specific steps to convert or port your policy by a designated deadline, you will lose your life insurance. Without an alternative plan, your beneficiary’s claim for life insurance benefits may be denied. 

How Does Group Life Insurance Work?

In most cases, group life insurance offered by employers must comply with The Employee Retirement Income Security Act of 1974 (also known as “ERISA”). ERISA is a federal law that controls most employer-provided life insurance plans and places many obligations on employers and insurance companies. ERISA mandates that employers and insurers:

  1.  provide correct information to employees about their life insurance coverage; 
  2.  provide employees with a Summary Plan Description (“SPD”) outlining important terms of the Plan
  3.  act in the best interests of the employees; 
  4.  provide easy access to plan documents and benefit help; 
  5.  act prudently and diligently with regard to employee life insurance benefits, etc. 
what happens to life insurance when you leave a job

Employer-Provided Life Insurance After Changing Jobs

While ERISA provides important legal protections to both employers and employees, such protections also come with obligations. Here are some duties you should know about when you leave your job:

Your Employer Must Inform You of Your Coverage Termination

When you leave your job and stop receiving a paycheck, the life insurance premium will no longer be paid directly to the insurer. As a result, your coverage will terminate. Your employer must send you a letter explaining when you will lose your life insurance coverage and what your options are. Federal courts have held that an employer has a duty to inform a departing employee of her right to continue or port group coverage. Your employer has a duty to notify you of any changes in your life insurance coverage even if you do not ask for this information. 

You Must Adhere to Strict Deadlines for Converting or Porting Life Insurance Coverage

While it is your employer’s duty to notify you of coverage termination, it is your duty to meet deadlines for converting or porting your group coverage. You can find this information in the Notice to Convert sent to you by your employer or the Plan documents which must be made available to you by the employer/insurer. Usually, the period during which you can convert a policy is 31-60 days from the date your group life insurance coverage terminates. You must follow specific instructions for filling out the conversion/portability application and filing it with the insurance company. You will also be responsible for paying premiums directly to the insurance company on time to make sure your coverage stays in effect. 

Read our blog post about life insurance conversion and portability to learn more about your employee rights.

Denied Claims: What Happens if You Fail to Convert or Port the Policy?

If your claim has been denied due to issues with portability or conversion privileges, it is important not to give up. While ERISA is complex, it does award many protections for situations where an employer or an insurer failed to provide proper notice or correct information to the departing employee. You still have a chance to collect the insurance death benefits if you submit an appeal. It is important to remember that in most ERISA denial cases you are allowed only one administrative appeal and a poorly submitted appeal rarely results in a denial overturn. Because ERISA laws are very complex and require a thorough investigation, you should consult with an ERISA lawyer who can navigate ERISA laws to your benefit, whether to go through the ERISA claim or appeal procedures or file an ERISA lawsuit.

when an employee terminates coverage under a group insurance policy

Contact a Lawyer if Your Employer Denies Life Insurance Claims Due to Termination of Coverage

If you or your loved one is on a medical leave due to an illness, it is important to learn about your life insurance benefits and what you can do to make sure they are in effect even if you are not actively working. If your loved one died while being on a medical leave and your life ERISA insurance claim has been denied, you may have a valid claim against the employer or the insurance. Our ERISA attorneys have a high success rate of recovering life insurance proceeds for our clients. 

At our law firm, we work on a contingent fee basis, which means that you will pay only if we win your case. Only then will we charge a reasonable legal fee. We offer competitive fee structures and will work with you to ensure you are comfortable with the fee. 

If you or someone you know has issues with a denied ERISA claim, call us at 888-510-2212 for a free consultation.

Here are a few cases successfully handled by our ERISA lawyers:

by Tatiana Kadetskaya

by Tatiana Kadetskaya

Attorney Tatiana Kadetskaya has over 10 years of experience in life insurance law representing beneficiaries and policy owners. She is best known for successfully collecting denied and delayed claims and settling complex beneficiary disputes and interpleader lawsuits.

Contact us