Life Insurance Conversion – Leaving a Group Plan

Organizations across Canada have been forced to temporarily or permanently lay off staff to deal with changing demand for products and services.


Although some insurers have extended generous provisions for extending benefits during temporary leaves, some employees have found themselves without group benefits coverage for life, disability, and health insurance.


When leaving a group plan, you may be offered the option to convert group life insurance to an individual policy without answering health questions. Despite the convenience of this offer, it may not make sense depending on your health status and situation based on the following factors:


  • Premiums are often higher as insurers generally assume that you would otherwise not be able to qualify for medically underwritten life insurance

  • Sometimes only limited policy options are offered

  • The amount allowable for conversion can be limited (to $200,000), and sometimes optional life insurance can’t be converted at all.

Consider the following example:

Gary, a 55-year old executive has life insurance coverage with his group plan. The group’s formula offers 2x annual salary with a total coverage amount of $467,000, and he has purchased optional coverage to provide an additional benefit of $440,000.


When Gary is terminated, he can convert a maximum of $200,000 of coverage.


Conversion Option:

$187.92 for a one-year term policy.


Individually underwritten insurance:

$63.72 for a Term-10 insurance policy


It’s a good idea to consider group life insurance a bonus to your individual life insurance planning needs. If you or someone you know has lost group life insurance coverage and is considering replacing it, please contact us. As always, we are happy to help!