What do I do with the Life Insurance after I left my job?
What do I do with the Life Insurance after I left my job?
I just left my old job for my new job 2 weeks ago. I received a letter from my old job's HR saying that my group (life) insurance has been discontinued and ask me if I want to convert it to an individual policy. The thing is I'm not so sure how things work. My new job also offers me this, but not until 4 months later. What do people normally do with their group life insurance when they left their job? Should I convert it to an individual policy or to my new job after 4 months if possible or can I cash that life insurance amount?
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3 Responses
1.31.2010
I recommend not converting it into an individual policy. It will cost you more money and it's probably doesn't provide enough coverage for your family. What you should do is shop around to get your own individual life policy.There are two types of life insurance you should look out for. One type of life insurance contains savings in it. They are known as whole life, universal life, variable life, variable universal life, variable whole life. When you see the word "variable" you can assume that a portion of your premiums is invested in the stock market. These types of life insurance provides protection to age 100 as long as you pay your premiums. If you ever wanted to use the savings in the life insurance, you have to borrow it and pay loan interest on it. If you die someday, you may lose all the savings.The other type of life insurance contains no savings in it. This is known as term insurance. Since they have no savings in it, premiums are very low and you can buy the right amount of coverage. Plus, you have the freedom to decide where you want to save your money. You have to be careful when shopping for term insurance. A company may sell you a 1 year term or 5 year term and then have you pay the renewals every year. Sooner or later you will see it cost you lots of money and the insurance agent will tell you to convert the term into whole life.To avoid this problem, you should get a 20-35 year term. At the same time, you should consider opening a Roth IRA if possible. I would put mutual funds into there and maybe government bonds. Lets say your investment portfolio in the next 20-35 years does an average rate of return of 10%. If you put in $100/month, in 20 years you can possibly get $76,570. In 30 years, you can possibly get $228,000. In 35 years, you can possibly get $383,000.10% is a conservative rate of return since the mutual funds I work with have an average rate of return of 14% in the past 25 years. If your investments made 6 figures in 20-35 years, would you still need life insurance or as much coverage? If you do, you should consider exchanging the term policy to a 10 year term. Source(s): http://finance1o1.blogspot.com
1.31.2010
Pay wih fine Source(s): http://www.freewebs.com/assurance-insurance
1.31.2010
OK, you can't cash in that type of life insurance – it doesn't build a cash value. You either let it lapse, or keep it. If I were you, I'd price out what a private policy would cost you. Odds are, it's going to be cheaper to get your own through a local agent, than it will be to continue this policy. HOWEVER, in the case that maybe you have some health issues? Or weight issues? It's possible you CAN'T get a private policy, in which case, I'd convert that policy in a New York minute. And I'd keep it forever, and just keep adding and converting as you move from employer to employer. Source(s): agent, 21+ years