Changing jobs can be a major decision. But have you ever considered how it could affect your life insurance policy? Many people overlook this aspect when transitioning to a new job, but it's important to understand the potential impact.
In this article we'll look at:
- How changing jobs can affect your policy
- Whether you need to change policy between jobs
- How employers offer life insurance
- What to do if you're unemployed
- How your job can affect premiums
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What happens to life insurance when you change jobs?
When you change jobs, it's important to consider the impact it can have on your life insurance policy. Depending on the type of policy you have and the insurer, a job change can mean a variety of things for your cover.
In some cases, you may be able to keep your existing policy in place with little or no interruption in service. This is especially true if you're moving from one full-time position to another with the same employer.
If you received life insurance cover through your previous employer, you may need to purchase a new policy when you switch jobs. This is because many employers will only offer policies that are tailored specifically to their employees.
If you have a relevant life policy through your own limited company, you should be able to convert it into a personal policy if you wish to.
If you are responsible for your own personal life insurance policy, it should remain unaltered regardless of your job status.
Do I need to change my policy between jobs?
In the case of employer-provided cover, changing job may mean that you'll need to purchase cover yourself. Employers will typically only offer policies tailored specifically for their employees and not necessarily transferable between jobs.
However, if you have an independent policy that is not provided by your employer, then no changes are usually necessary.
Do employers offer life insurance?
Some companies offer life insurance plans to their employees as part of an employee benefits package.
Employer-provided policies can be a great way for employees to protect their family and/or loved ones in case they pass away. Companies that offer group life insurance usually pay the premiums and provide death benefits up to a certain amount.
Another type of cover typically offered is death in service benefit. Unlike a standard life insurance policy, it pays out a lump sum if an employee dies while employed with the company. However, if you leave the company, you will no longer be protected under the policy.
Employers may also have additional cover available to purchase at reduced rates.
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What if I'm not employed?
If you're currently unemployed and looking for work, it's still worth considering life insurance. After all, who knows what might happen to your family/loved ones if you suddenly died? Although you won’t be able to receive a plan through your employer, there are other options.
The two main types are whole life insurance & term life insurance.
Term cover protects you for a set amount of years, paying out if you die within this time. If you survive the policy term, you won’t receive a payout, so it’s a viable option for terms of up to 50 years (maximum length will vary depending on the insurer and the age of the applicant).
However, if you want permanent cover, then a whole of life policy is usually the best option. Unlike term cover, it protects you for the rest of your life, paying out a cash lump sum when the time comes. Another difference is cost, with whole life policies charging higher premiums as cover is permanent and a payout is guaranteed as long as you keep paying your premiums
Please note: The insurance products offered by Cavendish Online have no cash-in value at any time. If you stop paying your premiums your cover will stop, your policy will end, and you will receive no benefit. If you have not claimed before the end of your chosen policy term, the policy will end, and no benefit will be paid.
If you are facing financial difficulty, please contact your insurer before cancelling your policy or letting it lapse. They may have options available that means you don't have to lose the plan.
How does my job affect my premiums?
The cost of life cover can vary depending on the type of job you have. For instance, those who work in high-risk professions generally pay more for premiums. This is due to the increased likelihood of them making a claim.
On the other hand, workers in lower-risk fields typically see low rates since companies view them as less of a risk.
What is deemed a high-risk job?
High-risk jobs are those that present an increased risk of injury or death, with the associated costs to the insurer. These occupations often include professions where employees must work in hazardous conditions or where an accident or event may likely result in death.
Such professions can include:
- Emergency responders, such as police, fire, and ambulance personnel
- Military personnel
- High-risk sports professionals, such as stunt performers and skydivers
- Construction workers
- Miners
- Fishermen
- Pilots
If you're unsure about whether your job is deemed high-risk, speak to our experienced advisers. They can help you understand how your job may affect the cost of life insurance, and what options you have.
Do I need to tell my insurer if I change my job?
In most circumstances, if you have an existing, personal life insurance plan, you won’t need to tell your insurer if you have changed jobs. This is because the terms and conditions of the plan are set out based on your circumstances at the time you took out the policy.
However, if you intend to change jobs in the future to something more high-risk, (like you will be joining the military in 6 months, for example), then you should tell your insurer or your adviser at the time of application. Failure to do so may result in a claim being denied.
Alternatively, if you had a high-risk occupation when you originally took out your policy, and now do not, you may want to speak to your adviser to see if a new plan would be cheaper or more comprehensive.
