Most people know that when you leave a job, your health insurance may be continued under COBRA. But here’s the part almost nobody realizes:
If your life insurance is tied to your employer, it usually disappears the moment your employment ends—whether you retire, resign, or get downsized. No exceptions.
Employer-provided life insurance often feels like “free” coverage. It’s deducted seamlessly from your paycheck, no questions asked, and usually doesn’t require health screening. But when it ends, you’re left exposed—and replacing it can be harder than you think.
No “COBRA” for Life Insurance
Health insurance gets special continuation rules. Life insurance does not. Once you leave, the policy is gone. There are no real “rules” on what the carrier can and cannot do, it is important to see what flexibility exists. Some plans allow conversion to permanent life insurance. However, you may have purchased “add-on” coverage for a spouse and / or dependents. These details need to be checked by you, there is no shortcut here, and no COBRA to protect your benefits, after your coverage expires, under term life insurance (unless there is a grace period, and that is not necessarily in place, for your specific plan).
Portability Might Exists, But You Must Act Immediately
Some group policies are “portable” or “convertible.” That means you may be able to keep coverage as an individual policy—but only if you move fast. The window is usually 30–60 days. Miss it, and the option vanishes.
Bad Combination: Health Decline Before You Apply
While employed, group coverage accepts almost everyone. This is the key element of employer-sponsored coverage, which is that there is ‘limited’ underwriting under group life insurance, there is individual underwriting for privately-purchased term life insurance.
But once you try to buy your own policy, and if your condition worsens—even slightly—you may face higher premiums or outright denial.
Underwriting Is Tougher Outside Work
This doesn’t receive the attention it deserves, it is a knowledge gap. But once you try to buy your own policy, and if your condition worsens—even slightly—you may face higher premiums or outright denial.
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Term life insurance is binary—you’re approved or denied.
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Permanent insurance (like universal life) offers more flexibility, but medical history still matters.
This is why losing group coverage without a backup plan is risky.
The Good News: Term Life Is Extremely Competitive
Here’s the bright side—term life insurance is one of the most competitive markets in the entire industry. Carriers constantly adjust rates, and “ties” (identical pricing across companies) are not difficult to find. If you’re healthy and act promptly, it’s possible to secure excellent coverage at surprisingly low cost.
To give you an idea:
$500,000, 20 year term policy, 40yr Female non-tobacco: less than $350 a year.
The Bottom Lines
Employer-sponsored life insurance is a benefit—not a guarantee for life. Once you leave your job, there’s no safety net. Acting early can mean the difference between affordable coverage and no coverage at all.
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