Changing jobs is one of the most stressful yet exciting transitions in life. Whether you’re moving for a higher salary, better benefits, or a career pivot, there’s a lot to consider—including your life insurance policy. Many people don’t realize that their employer-sponsored life insurance may not follow them to their new job. If you’re switching jobs, here’s what you need to know about canceling or adjusting your life insurance coverage.
Understanding Employer-Sponsored Life Insurance
Most companies offer group life insurance as part of their employee benefits package. This type of policy is often term life insurance, providing coverage for a set period (usually as long as you’re employed with the company). The premiums are typically low or even fully covered by the employer, making it an attractive perk.
However, employer-sponsored life insurance has some key limitations:
- Coverage Ends When You Leave – If you resign or get laid off, your policy usually terminates unless you convert it to an individual plan.
- Limited Customization – Group policies often have fixed coverage amounts, which may not meet your personal needs.
- No Portability – Unlike individual policies, you can’t take employer-sponsored life insurance with you when you switch jobs.
Steps to Cancel or Adjust Your Life Insurance When Switching Jobs
1. Review Your Current Policy
Before making any changes, check the details of your employer-sponsored life insurance:
- Coverage Amount – Is it enough to support your family if something happens to you?
- Beneficiaries – Are they up to date?
- Conversion Options – Some policies allow you to convert to an individual plan without a medical exam.
2. Compare New Employer’s Benefits
If your new job offers life insurance, compare it with your current policy:
- Does the new plan have similar or better coverage?
- Are premiums higher or lower?
- Are there any exclusions or waiting periods?
If the new policy is sufficient, you may not need to keep your old one.
3. Decide Whether to Cancel or Convert
If your new employer doesn’t offer life insurance—or if the coverage is inadequate—you have a few options:
Option 1: Cancel and Replace with an Individual Policy
- Shop for a term or whole life insurance policy independently.
- Compare quotes from multiple insurers to get the best rate.
- Ensure there’s no gap in coverage during the transition.
Option 2: Convert Your Group Policy to an Individual Plan
- Some employer plans allow conversion without medical underwriting.
- This is useful if you have health issues that could make buying a new policy expensive.
- Be aware that converted policies may have higher premiums than a new term life policy.
Option 3: Keep Both Policies (If Needed)
- If your new job’s coverage is lower, you might keep your old policy (if portable) or supplement with a new one.
4. Notify Your Employer and Insurer
Once you’ve decided, take these steps:
- Inform HR – Let them know you’re canceling or converting your policy.
- Submit Required Forms – Some insurers need written confirmation before processing a cancellation.
- Confirm Termination Date – Ensure there’s no overlap or lapse in coverage.
5. Update Your Beneficiaries
If you’re getting a new policy, review and update your beneficiaries. Life changes (marriage, divorce, new children) may require adjustments.
Common Mistakes to Avoid
- Assuming Coverage Transfers Automatically – Employer policies usually don’t carry over unless you convert them.
- Letting Coverage Lapse – If you cancel before securing a new policy, you could be left unprotected.
- Ignoring Conversion Deadlines – Some insurers require conversion within 30 days of leaving a job.
Final Thoughts
Switching jobs is a great opportunity to reassess your financial safety net. Don’t let your life insurance fall through the cracks—review your options, compare policies, and make an informed decision that keeps you and your loved ones protected.