Portability allows an employee to continue his or her coverage upon termination of his or her employment with the group. Portability is available for Optional Life Insurance and Optional Dependent Life Insurance. Employees and dependents may continue coverage under the portability option without providing evidence of insurability and regardless of their health status.
This section includes:
When is an employee eligible to continue their group term life insurance coverage under the portability option?
In order to elect portability upon termination of employment, the employee and dependents must have been covered by the group’s coverage for at least 12 months. The employee and dependents must be under the age of 65 when employment terminates, and employment must not have terminated due to a disability. The employee must elect portability in order for the dependent(s) to also elect portability.
When should the portability application be submitted?
The employee and dependents must elect portability coverage within 31 days of the termination of group coverage.
After we receive the portability application from the employee, we will issue a new Schedule of Benefits to the employee and dependents. The ported coverage will reduce by 35% at age 65.
When does the portability coverage become effective?
Ported coverage becomes effective on the 32nd day following termination of employment.
What amount of group term life insurance can be ported?
The amount that may be continued under the portability option is the employee’s and dependent’s coverage amount, or they may elect to port a lower amount. Once elected, the benefit amount may not be changed.
Portability coverage is group term life insurance. Coverage is provided through a group insurance trust. The rates for portability coverage are pooled for the entire trust group and are in 5 year age bands. Each employee will be billed individually for their ported coverage. Billing options for ported coverage include quarterly, semi-annual, and annual.
Are there any exceptions to what an employee is eligible to port?
Yes. Basic Group Term Life, Accidental Death and Dismemberment, and Disability Insurance are not eligible for portability coverage.
What happens if the individual dies within the time period allowed for portability?
Because portability is a privilege and not a legal right, if an individual dies during the time period allowed to elect portability, no payment will be made. However, payment might be made under the Conversion Right if the requirements of Conversion are met.
Who is responsible for notifying the eligible person of their portability privilege?
It is the employer’s responsibility to notify eligible persons of their portability privilege. There is typically no extension of the life insurance portability period due to delayed notice to employees of their portability right.
When does portability coverage end?
Portability coverage ends when the employee or dependent reaches age 70. Of course standard provisions regarding nonpayment of premium also apply. If coverage terminates because premium was not paid, ported coverage cannot be reinstated.