Life insurance with work: conversion privilege
Having a baby coming soon to the family, I've been thinking about term insurance (as suggested on Canadian Capitalist for example). I've been getting quotes from different brokers and it's still pretty expansive (almost 100$ a month for a million dollar for the two of us). So I went back to look at what I can get through work. Although I can't get up to 1M$, I still have the option to add up to three times my salary to the existing two times I already have. So I could get five times my salary in coverage. I think that might be good enough if I count my other assets (I'll have to double-check that assumption obviously). I was worried about losing that insurance if I lost my work (and maybe not being insurable by then) but I found this neat little clause in the contract:
Basically, I would start paying bigger premiums directly to the insurance company, but at least I would still be insured. The critical thing is that you don't have to prove you are in good health.Conversion Privilege
All Optional Group Term Life Insurance includes a conversion privilege which allows you, during the 31 days following termination of employment or attainment of age 65, to convert the Group Term Life Insurance to one of a number of Sun Life’s individual policies without providing evidence of good health. The premium would be the same as would ordinarily be paid if an individual policy had been applied for at that time.
Staying with my work insurance, would save me close to 85$ a month. It's a big enough amount to consider this option very strongly. I've also surveyed a lot of co-workers and many of them are doing only that as well.
3 comments:
I would recommend finding out the individual premium (is it term based or whole life based) right now. When I left my old employer earlier this year, I asked for a quote "just to see" what the indivual offer. Much to my surprise, I got a letter informing me they only offer whole life and the primium charge was a HUGE increase over what I was paying as an employee.
anonymous: that's a really great tip! thanks
Word of caution:
I remember a situation from 2 years ago where my boss had a client with both work-provided insurance and private insurance. Tragically the client died in a snowmobiling accident. The work provided insurance denied the claim as he had alcohol in his system. The private insurance paid out within 2 weeks.
Private insurance allows for underwriting at time of application - after 2 years of the policy, the policy becomes incontestable by the insurance company. You could even commit suicide after the 2 years and get paid out (so long as it could not be proven that you planned on taking your life after two years as part of insurance fraud).
Work provided insurance has lots of loopholes that allow for them to deny more claims. The underwriting is "at time of claim". This is the reason the premiums are cheaper - there is no appreciable discount in rates because of a bulk buy - the industry is too competitive - the premiums are cheaper because there are ways for them to avoid paying claims. I'm not saying it happens all the time, but it does happen on rare occasions.
If you give me your ages and the amount of coverage you want quoted I have some quoting software.
Manulife has a good product called family term that allows for two people on the policy without it being a "joint" policy in that it is not "joint last to die" or "joint first to die". This means you can each have separate coverage, but the pro is that the cost is only a few dollars more with this product that "joint" policies with other insurers.
Worst case scenario: you are with your spouse in a car accident (baby at home). You both die. With this product you each get $1 million paid out to the estate for a total of $2 million. With either joint last or join first only $1 million goes. Most people get the joint policies because they don't think they will die at the same time and have one parent left - sadly sometimes they both die at the same time as just described.
btw, I really like your blog.
Post a Comment