Currently, I have life insurance through my employer. If I leave the company and become an independent contractor, then after 2 years go back to full time with another employer that also offers insurance, will the insurance company make any trouble? While self employed, I will buy term insurance. I know that insurance companies don't like it when there is a discontinuity.
asked Sep 26, 2013 at 19:37
Add a comment
|
1 Answer
Life Insurance is calculated at the time the policy is written based on your current risk rating. Unlike health insurance that will give you a discounted rate when you have had continuous coverage for several years, a life insurance policy does not care.
You could have a term policy that you paid on time every time for thirty years. In the 29th year develop terminal cancer, and die the day after your term is up, the insurance company would have no obligation to even allow you to continue after that original term.
How ever that also works in your favor. You are rated before the policy is issued and so long as you keep the policy current the insurer is obligated to pay any qualifying benefits. So a year into a 30 year term you could develop that cancer, and pass and your family would receive the same benefit they would have received had you passed on the last day of your term.
When you leave your employer they may offer a continuation policy. You would basically be able to pick up a similar policy to what your company offered but with out the company discount. Most people can get a better deal than the continuation policy but the continuation policy is usually written for the worst risk group for the policy. If you are a non smoker in decent shape you can probably do much better than that.
So when you leave you can get a term life policy, if you take a shorter term (say 5 years) to cover just the period you plan to be with out company sponsored insurance you can usually get a much better rate than if you opt for a 20-30 year term. The agent will of course try to sell you a longer term but in the end if you are certain that you only want a 5 year term most agents will find a policy to fit you.
If 5 years from now you have gone from fit non smoker to fat, diabetic, chain smoker you are not going to get a new policy. If you keep in shape then getting a new policy with your employer should not be a problem. In addition you can have multiple life insurance policies. If you find a good policy with a 30 year term you may want to keep that policy in addition to the new policy to provide more for your family should they need it.
