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The right to transform collective insurance

> Valid in Québec

There is a clause in insurance that makes it possible to transform its life insurance collectively into individual life insurance: it is the right of transformation. With this right, employees have the privilege of converting their group life insurance into individual life insurance upon termination of employment or termination of the policy. In short, if there is a termination of employment for any reason whatsoever and the employee in question subscribed to group insurance, the employee has a conversion right if he submits his application within thirty (30) days Following termination of employment. In this case, the insurance company has an obligation to provide life insurance to the employee who ceases to hold office, regardless of his state of health. It should be noted that in the case of processing, the choice of individual products is often restricted; Generally, it is permanent or whole life insurance with guaranteed surrender values ​​and a slightly higher premium than the average. The amount of insurance offered must be equal to the amount of the collective coverage that ends. However, the insured may request less coverage. The premium for this insurance will be calculated according to the age of the individual at the time of the application, according to the standard tariff table, that is to say “smoker”.

When the policy terminates, that is, when the employer terminates his group insurance with his insurance company, the right of conversion applies under the same rules. This is also true when the employer decides to drop special protection. In this case, the right of conversion would apply if an employer canceled the life insurance, but retained the other protections. On the other hand, a change of insurer does not give a right of transformation, even if there is a downward modification – but maintenance – of the protections.

Let's take the example of Tommy. Aged 28, Tommy has cystic fibrosis and has been working for a major manufacturer in his area for eight months. Tommy is a member of group insurance and has life insurance coverage equal to one (1) times his annual salary of $ 37,000. Jean was able to purchase group insurance in spite of his state of health, because the insurance company ensures a group on defined conditions, not a particular individual.

Unfortunately, Tommy must leave his job due to the deterioration of his health. He then goes to his employer's personnel office and makes sure to make a conversion request in writing using a form provided by the insurance company. Ideally, this is done when he leaves his job. Upon receipt of this application, the insurance company contacts Tommy to offer him certain life insurance products and explain the terms of the corresponding contracts. Given Tom's age and the “smoker” rate, John will have a choice of permanent life insurance products, with a premium of between $ 35 and $ 60 per month, for coverage of $ 37,000 $ Depending on the type of policy he chooses. Of course, Tommy made sure to complete the form within thirty (30) days from the date he left office. Jean is completely satisfied because he knows that this is the only chance he has of subscribing to a life insurance policy because of his illness. What is important to remember is that it is possible to obtain life insurance at a reasonable price if you leave a job that offers group insurance. If you have any questions, I would be happy to answer them.

Special Collaboration:

Pierre Thibaudeau, B.A.A. Independent advisor, financial security advisor, mutual fund representative Such. : 819-376-8666, ext. 238 – E-mail: pierre.thibaudeau@sfl.qc.ca

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