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- Group insurance conversion in Canada enables individuals to switch from group to individual health and dental, life, critical illness, and disability insurance policies post-employment
- Medical exams are not mandatory for conversion, but age may influence premium adjustments
- The process entails eligibility verification, coverage selection, premium calculation, and application submission
- Converted individual policies extend essential benefits like vision care, medical services, accidental dental, and survivor benefits
Most working professionals in Canada don’t think about their employee benefits until they lose them. Whether you are changing jobs, getting laid off, or retiring, the coverage offered under the group benefits plan will stop. When this happens, the first question that pops up is: Can you keep your coverage or convert it to individual insurance?
The answer is yes: it is possible to convert group insurance into individual insurance, meaning you stay secure even when you choose to leave your job. Wondering what this means? In this article, we’ll walk you through everything you need to know about converting your group benefits to individual insurance in Canada, including how it works, what’s eligible, and what to watch out for.
What is group insurance conversion?
Group insurance conversion in Canada is the process of converting a group policy into an individual insurance policy when you leave a job, retire, or are terminated. This conversion helps ensure you are not left without coverage when your employment ends, but the type of benefits available, pricing, and rules vary by insurer and plan.
Converting group medical insurance to individual coverage typically does not require you to undergo medical exams. However, the insurer assesses your age as a factor in calculating your new premium post-conversion, which may increase or decrease the annual cost of individual coverage. Conversion applies to health, dental, life, and disability insurance, providing you with continued coverage outside the group setting.
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Who does a group conversion plan benefit?
A group insurance plan is ideal for those who are:
- Transitioning into retirement
- Shifting from full-time to part-time status
- Affected by layoffs
- Moving on to self-employment
- Leaving employment with pre-existing medical conditions
What is the process of converting a group plan?
You can convert your group coverage into an individual insurance policy by following the process below:
- Eligibility: An employee must be eligible for conversion under the group policy terms. Usually, there is a limited window of time, ranging from 31 to 60 days after leaving the group to exercise the conversion option. The conversion window can vary based on the policy terms
- Coverage amount: You can convert a portion or all of your group insurance coverage into an individual policy. However, there may be limitations on the maximum amount that can be converted based on a percentage of the original coverage amount
- Premium calculation: The premium for the individual policy is calculated based on your age at the time of conversion and the coverage amount that you opt for. Individual policies are typically priced based on risk factors like age, health, and lifestyle
- No medical underwriting: A major advantage of conversion is that you don’t need to undergo medical underwriting, meaning your health status at the time of conversion does not impact your eligibility or premium rate for the individual policy
- Notification and application: You must notify the insurance carrier of your intention to convert your coverage within the specified timeframe and submit a conversion application along with any required documentation and premium payments.
- Issuance of an individual policy: Once the insurer processes and approves the conversion application, the insurer will issue an individual life insurance policy to you, giving you continued coverage regardless of your employment status.
What are the advantages of converting to an individual plan?
Converting a group policy to an individual policy offers several benefits:
- Continued coverage: Ensures uninterrupted coverage after leaving a group, such as due to job loss or retirement
- Customization: Provides the opportunity to tailor the policy to individual needs, potentially offering more suitable coverage options. You can tailor your coverage to suit by selecting from a range of coverage levels, optional benefits, and deductible options
- Independence: Removes dependence on employer-sponsored coverage, giving individuals more control over their insurance
- Portability: Allows individuals to maintain coverage regardless of changes in employment or group affiliations
- Long-term stability: Provides the potential for stable coverage over the long term, even if switching jobs frequently or during career transitions
- Underwriting flexibility: Depending on the insurer, underwriting for individual policies may consider individual health factors, potentially resulting in more favourable terms
- Additional benefits: Some individual policies may offer additional benefits or riders not available through group coverage, such as enhanced coverage for specific medical conditions or higher benefit amounts
What benefits will you get after converting to an individual policy?
If you opt for a basic health plan after converting to an individual policy, insurance providers calculate premiums based on factors like age, and lifestyle, and offer the following benefits:
- Vision care
- Registered therapists and health practitioners
- Hospital accommodation
- Hospital daily cash benefit
- Local ambulance
- Private duty care nursing
- Out-of-province, in-Canada travel
- Medical services and supplies
- Accidental dental
- Survivor benefit
If you opt for additional dental coverage, you may get the following benefits:
- Diagnostic expenses (oral examinations, x-rays)
- Preventive treatments (polishing, fluoride treatments)
- Restorative treatments (fillings)
- Periodontal cleaning (scaling and root planing)
- Prosthodontic services (repairs & minor services only)
- Oral surgery (routine extractions)
Depending on your policy terms, 50-80% of your expenses would be covered under your conversion plan.
What information do I need to provide to convert my group plan into an individual plan?
To convert your group plan into an individual plan in Canada, you’ll need to provide specific information to your insurance provider. Here’s what you’ll typically need:
- Personal details: Name, address, date of birth, contact information
- Group plan information: Policy number, coverage dates, benefits to convert
- Health history: Details on pre-existing conditions, and recent medical treatments
What is the difference between porting and converting group benefits?
When it comes to changing group benefits in Canada, it’s helpful to know the difference between porting and converting. Porting means moving benefits to a new plan, usually linked to life events. Converting means switching group benefits to an individual plan, often when leaving a group setting.
Here’s a comparison table that’ll help you understand the differences between porting and converting group insurance better.
| Aspect | Porting Group Benefits | Converting Group Benefits |
| Coverage continuity | Continuing the same group insurance coverage after leaving your job | Switching from a group plan to a new individual policy |
| Type of plan | Move to a designated individual or “portable” plan | Gets converted to an individual plan |
| Employer role | Involves coordination with the employer | Can be initiated independently of the employer |
| Flexibility | Limited customization | Slightly more flexible |
| Deadline to apply | Usually 30–60 days | Typically 31 days, varies by insurer |
| Underwriting | May involve underwriting for a new plan | Not required |
| Premiums | Premiums may change based on the new plan | Premiums may change based on the individual risk profile |
| Coverage scope | Keeps similar benefits, limits, and structure | Coverage may change significantly |
Events when you can avoid conversion to individual insurance
Listed below are a few events when you can choose not to convert a group policy to individual insurance:
- You are young and healthy: If you have no major health concerns, you are likely to qualify for a new individual policy at a much lower premium. Converting a policy, on the other hand, can be a more expensive option
- You are switching to a new job: If your next employer offers comprehensive group insurance, converting your old plan is usually unnecessary. Employer-sponsored plans are often lower-cost options, so paying out-of-pocket for a converted policy can result in higher costs for similar or even reduced benefits
- You only need temporary coverage: If you expect to get new coverage soon through a job change or a spouse’s plan, conversion may not be worth the cost. In such cases, waiting for new benefits to begin can be a more practical and cost-effective solution
- You missed the conversion window: Conversion must be completed within 31 to 60 days of leaving your job, in most cases. If you miss this deadline, the option disappears, and you will need to apply for a new policy with medical underwriting anyway
What factors should I consider when converting a group plan to an individual plan?
Whether or not you should convert to individual insurance depends on your specific needs and circumstances. Here are some factors you should consider:
- Health needs: Assess your current and anticipated health needs and see if an individual insurance plan can meet those requirements. You should also consider existing medical conditions, potential future healthcare needs, and the level of coverage you need
- Finances: Calculate the cost implications of converting to an individual insurance plan compared to maintaining coverage under a group plan. Take into account premiums, deductibles, co-payments, and out-of-pocket expenses and see if the individual plan is more affordable
- Policy options: Compare different policy options available in the individual insurance market to find a plan that aligns with your healthcare needs. You can choose from different options like whole life or term life insurance, mortgage insurance, non-convertible to term life, and convertible to term life, etc
- Long-term planning: Consider your long-term healthcare needs and financial goals when deciding whether to convert to an individual insurance plan
- Consultation: Seek advice from our licensed insurance professionals to know more about converting to an individual insurance plan
Frequently Asked Questions
Should I convert group life insurance to an individual plan?
Converting group life insurance to an individual policy is a personal decision that depends on your needs and circumstances. Individual policies offer flexibility and portability, ensuring coverage continuity beyond employment changes.
How long do I have to convert a group policy to an individual policy?
Typically, conversion options are available within a specified window after leaving the group, ranging from 31 days to 60 days. It’s crucial to act promptly within this timeframe to avoid losing coverage options.
Do I need to restart my coverage plan after changing the group policy?
Converting from a group policy to an individual policy does not require restarting coverage. Instead, it ensures seamless transition and continued coverage outside of employment.
Which is better: converting or buying a new policy?
Conversion is better if you have pre-existing conditions or may not qualify for a new policy, since it doesn’t require medical underwriting. However, if you are young and healthy, buying a new individual policy is usually the better option because a new policy is more affordable.
Converting group life insurance to an individual plan allows employees to maintain insurance coverage outside of employment, ensuring continued financial protection for themselves and their dependents. In this article, you will learn how to convert group insurance to individual coverage in Canada.
