When you leave an employer, you will lose some of the benefits that came with working there. You could lose your health insurance, access to your 401k and some other parts of your benefits package. If you are at risk of losing your group life insurance coverage or health coverage, you may be given the option of porting your policy. This involves keeping your same insurance benefits although you are no longer part of the group.
Keeping Group Coverage
One reason porting is attractive is that it allows an individual who has a group insurance policy to keep coverage, regardless of his health. If you have a health condition that would keep you from qualifying for a personal insurance policy, porting your policy from your group coverage might be your best option. This will allow you to keep the same coverage limits and you will not have to pass a medical exam or answer health-related questions.
Part of Another Group
In many cases, when you port your insurance policy, you will be lumped into a different group of insureds. While part of your employer's group policy, your rates are based on the group of which you are a part. When you port your coverage, you will be grouped with other individuals who have also ported their insurance policies from an employer. At that point, your rates could change as the underwriting standards are different.
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Portability vs. Convertibility
When you leave your employer, you may be given the option to port your policy or convert it. While these are similar options and they both allow you to keep some type of life insurance, they are not the same. With convertibility, you will actually convert your policy into another type of coverage. For example, you might obtain a whole life policy that provides you with a certain amount of death benefit and cash value.
When you port your life insurance policy from your group policy, you may be eligible to keep some of the optional benefits that came with your original coverage. For example, if you had an accidental death coverage rider with your group policy, you may also be able to keep this coverage when you port your policy. Since you are now paying for the policy on your own, these extra options may add to the total cost.
Porting Health Insurance
The Health Insurance Portability and Accountability Act of 1996 ensures your insurance rights when dealing with a health insurance plan. This allows you to continue your health insurance when you leave an employer under the Consolidated Omnibus Budget Reconciliation Act, also known as COBRA. It also provide you with additional opportunities to enroll in group plans if you lose your group coverage.