Planning Points: Continuation Options: The Smart Way to Preserve Your Insurance Benefits

When changing jobs, it may be worthwhile exploring the continuation options. Picture:

When changing jobs, it may be worthwhile exploring the continuation options. Picture:

Published Oct 22, 2023


By: Palesa Dube

When you leave your job, your group life benefits end, or at least that's what many believe. The truth is: not necessarily.

If you are retrenched, venturing into entrepreneurship or changing jobs, it may be worthwhile exploring the benefits of exercising the continuation options (sometimes referred to as conversion options) that your employer group risk benefits may provide.

First, what are they? Many employees are unaware that when you exit your employment, you may have the option of continuing your group life policy, disability or income protection, and even dread disease insurance in your personal capacity, therefore converting it into an individual policy.

That is, if the continuation option was included as a benefit in the scheme. This is especially an option to consider where your new employer doesn’t provide the same or better benefits, as having less benefits can create a significant gap in the coverage you may need, jeopardising your and your family’s financial security if you become disabled and more dire, leave your family with inadequate financial provision should you die. Exercising the continuation options also needs to be considered by those venturing into entrepreneurship as you need to make the arrangements yourself.

The real benefit of exercising the continuation option is that you won’t need to go through medical tests or answer health questionnaires for the level of cover you enjoyed while employed. This means that you won’t face increased premiums or exclusions due to existing medical conditions like high blood pressure, diabetes or the like. Therefore, exercising the conversion option allows you to secure coverage at the best rates based on your age.

It’s essential to regularly revisit your financial planning arrangements, particularly when you are changing jobs, to ensure that you maintain appropriate levels and variations of cover for your requirements. A certified financial planner can advise on the insurance you may need to carry over should the benefits provided by your new employer be inadequate. There are a few things to keep in mind as you make your way through the transition:

Be aware of the deadlines: If the information is not readily given to you as you exit, enquire from HR or your employee benefits provider how much time you have within which to exercise the continuation options as the benefit does have an expiry date. You are usually given between 30 to 60 days, but this isn’t always standard. Your financial planner can assist in gathering this information for you.

Evaluate your needs and what you can afford: Your financial planner is best placed to assist in ascertaining how much cover you require, considering what a new employer may be offering you. Based on the outcome of the analysis, you then need to determine if you can afford the additional cover required.

Explore other options: While it is beneficial to exercise the continuation option where your health may have become compromised over the years, in general it’s good practice to compare what rates and benefits various providers can give you. An independent financial planner is invaluable to assist with this aspect.

Review your insurance portfolio regularly: Use this transition period to revisit your insurance portfolio and your holistic financial planning provisions, including you retirement and investment provisions as it is vital to assess whether you are on track to meeting your long-term financial goals to secure yours and your family’s future.

Understanding and using continuation options as you leave your employment can be a game-changer for your financial security, helping you have a seamless transition in your insurance coverage and thereby giving you peace of mind. Engage the assistance of a certified financial planner that understands your and your family requirements and can advise you on how to ensure that you have the appropriate plans in place.

* Dube is a certified financial planner and director and wealth manager at Centillion Wealth Advisory. She is a practising member of the Financial Planning Institute of Southern Africa and is the Financial Planner of the Year 2022.

**Disclaimer: This article provides general information and does not constitute professional advice. Please consult a certified financial planner to assess your specific situation.