What Is The Difference Between Life Insurance Conversion And Portability?
If you have group term life insurance through work and decide to leave your place of employment, you may or may not have the option to keep your coverage in some form. If you do have the option to keep coverage, which means it is convertible – and you may convert it to a whole life policy – or it is portable – and you can take the coverage with you. (It’s important to note that some individual, or non-group term, policies have a conversion right as well.)
| Convertible Policy | Portable Policy |
|---|---|
| Converts group or term life insurance to a whole life policy | Remains term life insurance, but can be taken with you if you leave your place of employment |
| Varies by state in terms of what the policy can be converted to | Typically only available for term life insurance policies |
| Premiums are typically more expensive | Premiums can fluctuate, but are generally less expensive |
Essentially, life insurance policies that are convertible can be converted from term coverage to whole coverage. Portable policies allow you to take coverage with you, even if you leave the place of employment where you initially enrolled in a group term policy.
There are advantages and disadvantages to portable and convertible policies. For example, if you decide to make your policy portable, the premiums may be less expensive than if you decided to convert it. In other words, if you decide to convert your policy to a whole life insurance policy, the premiums may be more expensive. However, with portable policies the premium may fluctuate, whereas convertible policies maintain the same premium over time.
If you have questions about convertible or portable policies, speak to a licensed insurance agent. If you have a policy in place and want to know about its conversion or portability privilege, contact a licensed insurance agent from the insurance company that issued the policy or speak to your benefits administrator.
