Group life portability keeps the coverage active. Group life conversion keeps the insurability. Both expire if the departing employee does not elect within the window specified in the plan certificate, which is typically 31 days from the date coverage ends. For most clients who call about life insurance after a job separation, neither option is what the broker should be recommending first.
Key Takeaways
- Group life portability lets a departing employee keep the group term coverage at group rates for a limited time (typically one to five years, depending on the plan). It requires an active election within 31 days of the qualifying event and is not available under all group plans.
- Group life conversion lets a departing employee convert any amount of the group term coverage to an individual permanent policy (usually whole life) without a medical exam. The election window is also typically 31 days, and the right is guaranteed under ERISA for most employer-sponsored group plans.
- Conversion is expensive because the premium is based on the individual whole life rate at the employee's current age, not the group term rate. A 45-year-old converting $200,000 of group term coverage to individual whole life often faces a premium three to five times higher than the group term cost.
- The most overlooked option is applying for new individual term life coverage during the portability window. Clients who are still insurable can often lock in better rates through underwriting than through either portability or conversion.
- The conversion right becomes most valuable when the client has become uninsurable due to health changes that occurred during employment. In that scenario, conversion is the only path to keeping coverage, regardless of cost.
What portability actually is (and is not)
Portability lets a departing employee keep the group term life coverage in force by paying premiums directly to the insurer, without going through the employer. The coverage type stays the same: term life with a level death benefit and no cash value. The premium is usually close to the group rate, at least initially.
Portability is not a federal mandate. ERISA requires employers to offer the conversion right (discussed below), but portability is optional. The employer and insurer decide whether to include it in the plan. Some group certificates offer portability for one year; others extend it to three or five years. Some plans do not offer it at all. Connecture and similar quoting platforms focus on health and ACA coverage; they surface nothing about the group life certificate at job separation. The broker has to pull that document.
The coverage limit under portability is often capped at the in-force amount. A client with $500,000 in group term coverage can port up to $500,000. Most plans also have a minimum amount ($10,000 is common) below which portability is not offered.
What conversion is and what ERISA guarantees
Group life conversion is different from portability in two important ways. First, it changes the coverage type: the group term life becomes an individual permanent policy, almost always whole life. Second, it is a federal right under ERISA. The employer cannot exclude it from a group plan covered by ERISA, and the insurer cannot require medical underwriting to exercise it.
The ERISA conversion right applies to the amount of group coverage that was in force on the last day of employment. A client with $300,000 in employer-paid group term can convert any portion of that, up to the full $300,000, to individual whole life without answering a single health question.
The catch is price. The converted policy is priced as individual whole life at the employee's attained age, not as group term life. For a 45-year-old male nonsmoker, the individual whole life premium on a $200,000 policy may run $350 to $500 per month. The group term cost for the same face amount was probably $40 to $80 per month through the employer. The conversion premium can be a shock.
The option most brokers skip: apply for individual term during the portability window
Portability and conversion both assume the client has no better options. For insurable clients, there is almost always a better option: apply for individual term life through a carrier underwriting process during the portability window.
The logic: a 40-year-old in good health who needs $500,000 in coverage can apply for a 20-year individual level term policy while keeping the ported group coverage active as a temporary bridge. If the term application is approved, the client gets:
- A policy at their current age, before any future health changes
- A guaranteed level premium for 20 years
- A rate that reflects their actual health, not a group average
Example: a 42-year-old nonsmoking male in good health. A $500,000 20-year term policy through underwriting might cost $45 to $70 per month from a competitive carrier. Porting the group term for the transition period costs less than conversion and buys the 4 to 8 weeks it takes for the individual application to close.
Illustrative example. Actual premiums vary by carrier, age, health classification, and state. Always run current quotes from underwriting carriers before advising a client on which path to take.
Portability vs conversion: side by side
| Factor | Portability | Conversion |
|---|---|---|
| Coverage type | Group term life. Level death benefit, no cash value. | Individual permanent life, typically whole life. Cash value accumulates. |
| Underwriting required | No. Coverage continues without health questions. | No. The ERISA conversion right is guaranteed issue. |
| Premium cost | Close to group rate for the initial period. May re-rate after year 1 or 3. | Individual whole life rate at attained age. Often 3 to 5 times the group term cost. |
| Duration | Temporary. Plan-defined period, typically 1 to 5 years. | Permanent. Coverage remains in force as long as premiums are paid. |
| Election window | Typically 31 days from date coverage ends. Confirm in the plan certificate. | Typically 31 days from date coverage ends. Same window as portability. |
| When it makes sense | Short-term bridge while the client transitions to a new employer plan. | Client is uninsurable through underwriting and needs permanent protection. |
When conversion is the right answer
Conversion matters most in one specific scenario: the client developed a health condition during employment that would result in a decline or rated premium through underwriting. This happens more often than brokers expect. A client who was healthy when they were hired but was diagnosed with Type 2 diabetes, had a cardiac event, or began treatment for cancer during employment may find that the group life coverage they accumulated is the only coverage they can get at a standard rate.
In that scenario, the conversion premium, however high, is the price of permanent coverage that underwriting would not grant. A client who declines to convert because of the premium and then finds out they cannot get individual coverage on their own has made a decision they cannot reverse.
The contestability period starts over on a converted policy from the new policy issue date, which is worth flagging for clients in the first two years after conversion.
The broker workflow for every job-separation call
When a client calls about losing their job, the ACA SEP workflow is usually the first conversation. The group life question belongs in the same call. The checklist:
Confirm the date group life coverage ends (often the last day of the month of termination, not the last day of employment). Get the plan certificate or the HR packet that lists portability and conversion options. Ask the informal health question: has anything changed medically since you were hired? If yes, flag conversion as a priority and get the election paperwork moving immediately. If no, open an individual term application during the portability window.
The term conversion privilege on individual term policies works on a similar logic: the right to convert without underwriting has a time limit, and clients who let it expire later wish they had not. The same urgency applies at job separation.
Group life at job separation: broker FAQ
Common questions when advising clients on group life insurance at the point of employment separation.
Is group life portability available under every employer plan?
No. Portability is a plan feature, not a federal mandate. ERISA requires employers to offer the conversion right, but portability is optional at the employer and insurer level. The employer's group life certificate (the plan document) specifies whether portability is available, how long the ported coverage can remain in force, and what the maximum coverage amount is. A broker advising a client on job separation should pull the certificate before the 31-day window closes, because some plans do not offer portability at all.
Can a client convert only part of the group coverage, not the full face amount?
Yes. The ERISA conversion right applies to all or any portion of the group coverage that was in force on the day coverage ended. A client who had $500,000 in group term coverage can convert $100,000 to individual whole life and let the rest go, for example. Partial conversion is common because the premium for full conversion is often unaffordable. The key constraint is that the amount converted cannot exceed the amount in force under the group plan on the date of the qualifying event.
What is the 31-day rule and what happens if the client misses it?
Most group life certificates give the departing employee 31 days from the date group coverage ends to elect either portability or conversion. Missing this window permanently forfeits both rights with respect to that employer's plan. Some carriers allow up to 60 days, so the broker should confirm the actual deadline from the plan documents rather than assuming 31 days. A client who misses the deadline can still apply for individual coverage through underwriting, but there is no guaranteed-issue path available after the election window closes.
How does portability differ from the ERISA conversion right in practical terms?
Portability keeps the coverage type: group term life, with a level death benefit and no cash value accumulation. The premium is usually close to the group rate for a defined period (often one to five years), after which the carrier may re-rate or terminate the ported policy. Conversion changes the coverage type: the group term becomes an individual whole life policy with a guaranteed premium for life and a cash value component. Conversion is permanent; portability is temporary by design. The right choice depends on whether the client needs temporary coverage during a transition or permanent insurability protection.
What should a broker do first when a client calls about job separation and life insurance?
The first step is getting the group life certificate and confirming three things: whether the plan offers portability, the election deadline (31 or 60 days from the date coverage ends, not the date the broker is called), and the exact amount in force. Then run the health qualification conversation informally: if the client is insurable through standard underwriting, an individual term application submitted within the portability window is often the best financial outcome. If the client has had significant health events during employment, conversion is the primary protection mechanism and the conversation shifts to which amount makes sense to preserve.
