What is Life Insurance Portability ?

Portable means "to carry". In this case, it's the ability of someone to continue life insurance coverage through an employer's plan following termination. You would be able to keep the policy at a reasonable premium as long as you continue to make the payments. It's essentially similar to COBRA except its for life insurance instead of health insurance, however, your company is not obligated to offer you policies with these benefits. The type of policy ported would be a term life policy. You would still be able to pay group rates; however, the premium is now based upon the ported into group instead of the group whereby your former employer was a part. Therefore, your premium may be different than the one you paid while still with your old employer.

How does portability differ from conversion?

Conversion is another option that may be possible when you leave your employer. Essentially, conversion offers you the option of converting your curent group term life policy into a whole life policy. The premium will rise since you are now converting the policy into a whole life plan. Whole life policies build cash value from which you can take loans. In addition, they include a cash surrender value. This means if you surrender the policy, you can receive cash or continue your coverage without further premium payments. Your amount of continued coverage would be based upon how much your cash surrender value could buy.

Portability and conversion are not guaranteed. Check with your employer to find out if your current group term life policy has either of both features.

There is a time limit upon which to act!

In both options, you typically have a time limit from the date of your termination in which to apply for portability and/or conversion. The time limit varies depending upon the insurer, but it's typically 30 days. This is a great opportunity to continue coverage at more affordable rates compared to an individual policy. If you have health issues, then it's even more important that you elect either the portability or conversion option. Getting an individual life insurance policy on your own with health issues is very difficult and expensive.

What are the benefits of portability?

As mentioned before, portability is very important for those who have health problems. Those with families and young children need to be mindful of taking this option when it's offered. If you're close to retirement, it may be good to elect portability in order to ensure that you have coverage for your spouse or for any needed burial expenses. Many times, especially for those closer to retirement, the cost of conversion to whole life is prohibitively expensive. Electing portability instead of conversion offers a good alternative.

What if I want to supplement my ported policy?

If you are considering life insurance or would like to supplement your current coverage with an additional policy to protect your family, then we suggest that you compare policies and rates from several A rated insurers. We recommend Insureme who allows you to compare several policies from major highly rated insurers such as Guardian, Met Life, Allstate, AIG, and more.

This should not be considered financial advice which can only be given by a qualifed financial professional. We suggest you consult with a qualified financial planner and/or insurance professional who is most qualified to consult with you regarding policy decisions. Many factors are involved in your policy premium some of which may not be mentioned in this article. We are an affiliate of the Bankrate Insurance Network.

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