What Happens to Your Employer Life Insurance After Retirement?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Employer Life Insurance Post-Retirement

When you retire, the life insurance policy provided by your employer typically ends. This is because employer-provided life insurance is generally a benefit tied to your active employment status. Upon retirement, you are no longer an active employee, which leads to the termination of this benefit. Some companies might offer the option to convert your group life insurance to an individual policy, but this conversion can come with higher premiums and may require a health examination.

Does Group Life Insurance Follow When I Retire

Reasons to Buy Personal Life Insurance Young

  1. Lower Premiums: The younger you are when you purchase a personal life insurance policy, the lower the premiums are likely to be. Insurance companies view younger individuals as lower risk, which translates into more affordable rates.
  2. Health Considerations: Buying life insurance at a younger age is advisable because you are more likely to be in good health. Health issues that often arise with age can make insurance more expensive or even disqualify you from obtaining coverage.
  3. Long-Term Coverage: Starting a personal life insurance policy young ensures that you have coverage for a more extended period, potentially up to 40 years or for life. This long-term coverage provides peace of mind and financial security for your dependents.
  4. Financial Planning: Having a personal life insurance policy aids in long-term financial planning. It can be used as a financial safety net for your family or as part of your retirement planning.
  5. Workplace Independence: Relying solely on employer-provided life insurance can be risky as it ties your life insurance coverage to your job. Personal life insurance remains with you regardless of your employment status.

Comparison of Employer vs. Personal Life Insurance

FeatureEmployer Life InsurancePersonal Life Insurance
Coverage DurationTied to employment; ends at retirementLong-term, often up to 40 years or for life
Premium CostOften paid by employer; may increase with ageBased on age at purchase; younger age yields lower rates
Health ExamTypically not requiredMay be required, especially for higher coverage amounts
PortabilityNot portable; tied to the jobPortable, stays with you regardless of job status
Coverage AmountOften limited to a multiple of salaryCan be customized based on individual needs
Does Group Life Insurance Follow Me When I Retire

Conclusion

Understanding the limitations of employer life insurance and the benefits of purchasing personal life insurance at a young age is crucial for long-term financial security. Personal life insurance offers more control, stability, and often more comprehensive coverage compared to employer-provided options, especially post-retirement. It’s a wise investment in your and your family’s future.

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Frequently Asked Questions

Can I keep my group life insurance policy when I retire from my job?

It depends on the terms of the policy and the employer. Some group life insurance policies can be converted to individual policies or kept after retirement, but others cannot.

How does group life insurance coverage change when I retire?

Depending on the terms of the policy and the employer, group life insurance coverage may decrease or end when an employee retires.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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