Group Life Lapses After 30 Days of Not Working

MANY EMPLOYERS may offer group life insurance and death benefits to their employees and these policies are purchased to help your family in case of your death. When group term insurance is provided through your employer, the employer usually pays for most (and in some cases all) of the premiums. The amount of your coverage is typically equal to one or two times your annual salary. But one thing that you need to know about is the extent of these policies. The older you get, the less the payout. Also, there are provisions that require you to work a certain amount of hours for the policy to stay in effect. For the most part this is not a problem, but if the worst should happen and you come down with a terminal illness and miss work for an extended period of time, there are some things you need to know. That's because group insurance contracts have what's known as an "actively at work provision." This requirement stipulates that coverage will be effective for an employee provided he/she is not absent from work due to sickness, injury, or other reasons on the date that coverage begins. Once coverage is in effect it continues for as long as the employee is working for the employer at least 20 hours a week, and as long as required premium contributions are made. Also, an employee cannot be away from work for more than 30 days. If they are, the policy will lapse for that employee. Many employers, upon finding out that an employee is terminally ill, will try to keep them on the group life insurance policy, but because of these restrictions, the employee who is out for this reason may well find that the life claim will be denied. If you find yourself in the unfortunate circumstance of having a terminal illness, and  you know you'll be missing work and maybe not returning, you will have 30 days to convert your group coverage into an individual policy. This provides you reasonable time to replace the group coverage that you had in effect while employed. For more information, feel free to Contact Neptune Financial to schedule an appointment.

Basic Understanding

This blog is being provided for informational or educational purposes only. It does not take into an investment objectives or financial situation of any individual, family, prospect, client, or prospective clients. The information is not written or intended as investment advice and is not a recommendation about managing or investing your retirement savings. An individual seeking information regarding their investment or retirement needs should contact a financial professional. Neptune Financial, and their financial professionals do not render tax and legal advice. Please consult your tax and legal advisors regarding your personal tax or legal concerns.