What Happens To My Group Life Insurance When I Retire?

Introduction – What is it?

Group term insurance plans provide medical coverage to a group of individuals under a single plan. The plans generally cover professional associations, housing societies, employer-employee, clubs, banks, etc.

The simple meaning of the word ‘term insurance’ is that it protects the beneficiary’s life. Employers offer term life insurance to their employees to safeguard and maintain their mental and physical well-being. Although the employer holds the policy, it is the employees who are the beneficiaries eligible to avail the plan’s benefits. In case of the unfortunate death of the insured, the nominee listed as the beneficiary will be eligible to receive the term life insurance payout.

Employers ensure that a group comprises members who have similar characteristics. Homogeneity must be maintained as the benefits offered under the plan act as a shield against the risk. Hence, the terms are identical for all members of the group, and it also reduces the requirement for a personal insurance plan.

How does the term insurance plan work?

Since the employer offers the term life insurance for most people in the group, the coverage is standardised and can be availed at affordable cost. The risk involved is divided amongst the members of the group, which further allows the premium cost to be competitive. The organisation benefits largely as it can conveniently offer medical cover to a large set of people.

What are the types of groups covered by the group term insurance policy?

Below are the types of groups-

  1. Employer-employee group: This type of plan covers employees under the same employer/organisation. It is a formal group. The employer/organisation purchases the group policy for its workforce. Businesses, companies, and other professional establishments consist of this type.
  2. Non-employer-employee group: The members of this group do not work under the same organisation. It is an informal group. The administrator is in charge of purchasing a term plan for securing the life of group members. Bank account holders, socio-cultural associations, credit-card holders, etc., consist of this type.


Employees should make the most of all their term plan insurance benefits. The following are the advantages that you must know about:

Zero Costs

The group term insurance policy is covered under the organisation’s employee benefits package. It means that it has zero impact on the salary of the employee. The organisation bears the entire cost. The organisation takes great effort to analyse the needs & requirements of the people in the group. The benefits of the plan can be extended to the family members of the employees too.

Financial independence

The plan assures financial independence to the employees. It allows them to focus on their work and remain stress-free. The plan is structured to encourage employees to keep a regular tab on their health status. There are free medical check-ups available to the employees. The employees can also check out how to apply for a Digital Health ID Card online, as it will help them avail of medical treatments at any time from anywhere.

Protect Your Dependents

Group insurance plans extend care to the insured and extend the required support to their family members. If the family lands in a disadvantaged situation, the group insurance plan comes to the rescue and transfers the rewards associated with the plan to them. It has proved to be highly beneficial in cases where the family’s sole breadwinner has an untimely death. It acts as an emergency fund that takes care of the medical cost at the time of need.

Now, you may have a question – what happens to my group life insurance when I retire? The answer to the same is quite straightforward.

Whenever an employee who is a part of a group insurance plan chooses to retire, the organisation extends an option to convert their plan into an individual plan. It is one of the most attractive features, making the plan even more popular. Employees would still need medical care and benefits post-retirement, especially if they are at a vulnerable age. So, it can be understood that the employee benefits will cease to exist under the group insurance upon retirement. The need to have an active individual plan gets accelerated if the retired employee is suffering from illness. Hence, it is wise for the employees to get an understanding from their employer regarding the conversion. Alternatively, the employees can inquire about individual plans and compare the costs. Whichever plan seems to be cost-effective to the employee can be chosen.


Since every individual’s medical condition is different, so will the need for medical insurance. The employees of an organisation must ensure that they read through all the terms and conditions of the group term insurance. All the benefits given to employees are as per the terms. The employees should also assess their need for a medical cover to help bear the treatment costs post-retirement. Accordingly, a judgement call for securing insurance should be taken after due assessment and comparison.

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