Can You Take Your Group Life Cover When You Leave Your Company?

Are you fortunate enough to work for a company that offers a retirement fund? Nowadays most companies offer their employees a cost-to-company style remuneration package, which exonerates them from looking after you (by that we mean funding your retirement, medical expenses, a potential disability claim, or even your family rocking up at their doorstep looking for compensation if you pass away). It’s much easier and far less of an admin nightmare for companies to ask their employees to sort out their own insurances and retirement planning. Is the cost-to-company package enough to cover everything from a comprehensive medical aid plan to a solid retirement annuity contribution? Probably not. But it’s not all bad news. To attract good talent, looking to stay for the long-term, some companies still use attractive “company perks” to entice people to join. A great company pension fund is still a shiny hook.

If you happen to work for a company with a retirement fund in place, there is a good chance you also enjoy a group life benefit which you probably didn’t even know existed.

What exactly is group life cover?

It’s a life insurance policy that covers everyone in the company and usually doesn’t involve medical examinations (good news if you have an aversion to sharp needles and the sight of blood). The group life cover is usually based on a multiple of your annual salary.

If you earn, R240,000 per annum (gross), then your dependents or beneficiaries might be entitled to 1,2,3,4, or even 5 times your annual income as a pay out from the group life policy, if you pass away while employed.

What happens if you leave the company though? Can you take the life insurance with you?

Yes, but it depends on one thing – Have you opted for a “continuation” benefit?

Remember the stack of paperwork HR dumped on your desk the day you started? There is a good chance some of that had to do with your company pension fund options. We aren’t going to haul you over the coals for missing a small tick box about group life continuation options, but if you have a chance today, go and check with your Human Resources department.

Why is this important?

Making sure you have opted for the “continuation” benefit means that if you leave the company you can transfer your life cover into an individual life insurance policy with the life insurer who underwrites the company group life scheme.

Why would you want to take your life cover with you if you left your company? That’s a good question and the crux of this article.

It makes sense to take your life cover with you when you leave if:

  • You want to avoid further medicals.
  • If you are unhealthy and might battle to get life insurance in your personal capacity.

It’s the second point which is key. Imagine for a second that you started with your company in your early twenties. Back then you were fit, strong and extremely healthy. Twenty years down the line and you aren’t necessarily the epitome of “fit”. You’ve developed high blood pressure, a few chronic ailments and at 100Kg you are concerned that you might not qualify for life cover at standard rates.

You’ve also decided to resign from your company for greener pastures.

If you had the option to convert your group life into an individual life policy, without any medical underwriting, you might just take it, right?

If you belong to a company pension fund with a group life benefit, make sure you go for the “continuation” benefit. You might never decide to exercise the option, but you would rather have the option the day you decided to leave, rather than not having it.

Until next time

The Wise About Life Team




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