Changing Jobs? Here’s How to Handle Life Insurance and Disability Insurance

by | April 11, 2023 | Disability Insurance, Life Insurance

Are you considering a new job opportunity? If so, you’re not alone. The average employee stays at a job for just over four years, so people of all ages will likely see a job change at least several times in their lifetime. Whether it’s a voluntary move, switching from full-time to part-time, or the result of a layoff, it’s a big event in your life that comes with financial consequences.

Have you thought about what happens to the insurance coverage you enjoyed while you were at your job?

Here are some of the most popular questions employees ask about these benefits, along with what to expect when you pursue your next opportunity.

What happens when you leave a job with insurance?

If you get your insurance coverage through somewhere other than your employer, such as your spouse’s workplace or directly from an independent insurance agent, nothing should change for you. You would keep your current policies. However, when you get to your next job, it may be worth looking at their benefits to see how they compare.

Some employers cover the complete cost of life and disability insurance for their employees, or at least significantly discount it. Seeing what your new job offers could be an opportunity to get more coverage for less money out of pocket.

If you only have an employer-sponsored plan, you should ask the HR or benefits department what will happen. Often, your group life insurance or disability insurance that you get through work could be lost if you change jobs, lose your job or retire.

Some policies may be portable, meaning you can take them to your new job. Check with the HR department to see what options are available to you. If they let you keep your plans, you’ll have to convert them from a group policy to an individual one, which may increase the price. You’ll also have to pay any amount of the premium that your former employer paid on your behalf as part of your benefits package.

What questions should I ask when choosing a new insurance plan at a job?

Starting a new job can be exciting. In addition to your new salary, consider what insurance benefits you can now access. Ask these questions to get the best idea of which plans are a good fit for you.

What insurance benefits do you offer?

Options include health, dental, life, disability, dismemberment, accident or illness insurance, or other reimbursement plans. Not all company benefits are created equal, so be sure to get a thorough picture of what’s offered.

Can I see a summary of the life insurance plan options?

Your new employer may advertise life or disability insurance, but what does this mean? Are the premiums affordable? Is it enough to really help you or your family if the worst happens? How long do you have to wait to be covered? Is a medical exam required?

Your life insurance through work is a great benefit to have, but coverage is typically only one or two times your salary, or a set amount like $50,000. While that may sound like a lot of money, you have to consider how long your loved ones would need to rely on that money to be OK financially.

Get the details of plan options before you commit, and consider purchasing an individual life insurance policy that you own. That way it always stays with you, no matter what job you have.

Is there an enrollment period?

Most employers give you so many days to sign up for a plan, whether 30 or 90. It often coordinates with when you’re eligible to start. Otherwise, they may have you start at the beginning of the next enrollment period if that’s coming soon. Ask when this is and what happens if you miss it; you may be forced to wait for the next open period.

You never know when you’ll need insurance. Owning an individual life or disability insurance policy can help make sure you’re protected regardless of the enrollment period. The same company you use for your home or car insurance may also offer these other policy types.

How do I pay for the premium?

Some insurance plans offered through work are at least partially covered by your employer, but this isn’t always the case. They could offer several plans, with only the lowest-cost, lowest-coverage plan being free. However much it costs you, ask how this cost will be paid. If it comes directly from your paycheck, will it be monthly, weekly or another frequency?

It’s common for employers to offer several coverage options, and you may only be comfortable paying for the lower-priced plan initially. While only you can decide how much coverage you need, consider how you might be able to afford more coverage over time. What are your plans for next year, after you’ve made more money at your new job?

With an annual policy review, you can compare your insurance needs against your budget and goals for possibly getting more coverage each year. With the employer covering at least some of the policy costs, this is an excellent opportunity to increase your coverage with less money out of your own pocket.

What to know: Every workplace handles insurance differently. This is true for someone leaving a company and for someone entering it as a new employee. Know the facts about insurance plans to stay empowered throughout your career journey.

Linsey Knerl

Linsey Knerl

Linsey is a Midwest-based freelance writer, author and mom of six who has covered personal finance topics for families and consumers for more than 15 years.

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