Group insurance plans normally offer life insurance. This is “term” life insurance, which is in effect for the duration of your participation in the group plan. It usually ends if you change jobs or when you retire.
The life insurance offered in a group insurance plan is often calculated by “bracket” of salary. A portion of your salary is your annual salary. For example, if you earn $ 40,000 per year, the standard installment coverage will equal $ 40,000.
Additional slices are always equal in value to the first slice. For example, if the first installment is $ 40,000, you can insure for another $ 40,000, but not for $ 50,000 or $ 30,000.
First tranche: compulsory
In most group insurance plans, it is mandatory to be insured for at least one salary bracket. The cost of the premium for your mandatory protection is mainly established according to the characteristics of the group of group insurance plan participants.
- This means that your age and state of health will not necessarily increase your premium.
- On the other hand, if the majority of people in your group insurance group are over 60, your premium could cost you more.
Other sections: optional
A group insurance plan also allows you to buy more protection, always calculated in installments.
Unlike the first installment, the cost of the additional installments is based on your age and state of health. The characteristics of the group are not used for this calculation. You may also need to have your health assessed because the insurer is not obligated to insure you beyond the first installment.
An option to extend your protection: the conversion right
Usually, group insurance plans provide temporary protection, for the time that you are employed by the employer for which you signed up for the plan. This means that if you quit your job, for example, you will no longer be insured by this group plan.
However, just before leaving this employer, you will normally have the right to convert your group life insurance into individual life insurance. This is called the “right of transformation”. This option will be available to you until the age of 65.
When a person converts their group life insurance into individual life insurance, they do not have to take a health test to prove that they are insurable.
The cost of the premium is established according to the member's age. It is therefore possible that the premium costs more when it becomes individual. It is also possible that the amount of insurance is lower.