When employment ends, most people assume their life insurance simply disappears. In reality, many employees have a legally protected right to keep life insurance coverage after leaving a job through what is known as a group life insurance conversion right. This right can be critical, especially for individuals who are older, ill, or otherwise unable to qualify for new life insurance on the open market.
Our life insurance attorneys regularly handle denied claims and lawsuits involving missed, mishandled, or undisclosed conversion rights. In many of these cases, the insurance company denies payment after death by claiming the policy terminated, even though the insured was entitled to convert coverage and was never properly informed of that right.
Understanding how conversion works, and how insurers and employers get it wrong, can make the difference between a paid claim and a complete denial.
What Is the Group Life Insurance Conversion Right?
A group life insurance conversion right allows an insured person to convert employer provided group life insurance into an individual life insurance policy when group coverage ends. This conversion happens without medical underwriting. No health questions, no exam, and no denial based on medical history.
Group coverage typically ends when one of the following occurs:
• Employment termination
• Retirement
• Reduction in hours below eligibility thresholds
• Leave of absence that ends eligibility
• Employer terminates the group policy
Once coverage ends, the conversion right allows the insured to preserve life insurance protection at a time when obtaining new coverage may be impossible.
Why Conversion Rights Matter So Much
Group life insurance is often the only life insurance a person has. Many employees rely on it for decades and never purchase a private policy. When employment ends late in life or during illness, losing that coverage can leave a family completely exposed.
Conversion rights exist specifically to prevent that outcome. Courts recognize that these rights are a fundamental protection built into group life insurance plans. When insurers or employers interfere with that protection, legal liability often follows.
How Long Do You Have to Convert Group Life Insurance?
Most group life insurance plans allow between 30 and 60 days from the date coverage ends to exercise the conversion right. This period is strictly enforced by insurers.
If the conversion application is not submitted within the conversion window, insurers usually claim the right is permanently lost. However, that is not always the final answer.
Many denied claims arise because:
• The employee was never notified of conversion rights
• HR gave incorrect information about coverage continuing
• Conversion paperwork was not provided on time
• The insured died during the conversion window
• The employer confused portability with conversion
Courts have repeatedly ruled that failure to properly notify an employee of conversion rights can preserve coverage beyond the stated deadline.
Employer Notice Obligations Under ERISA
Most employer sponsored group life insurance plans are governed by ERISA. Under ERISA, employers and plan administrators have a duty to clearly inform employees of their rights when coverage ends.
This includes:
• Explaining conversion rights in plan documents
• Providing notice when coverage terminates
• Disclosing conversion deadlines
• Supplying required forms or instructions
When an employer fails to do this, beneficiaries may still recover the full life insurance benefit even if conversion paperwork was never completed.
We regularly recover benefits in cases where insurers deny claims based on missed conversion deadlines that were never properly disclosed.
Conversion Versus Portability
Many people are misled because employers mention portability but fail to explain conversion. These are not the same.
Conversion
• Creates a new individual life insurance policy
• No medical underwriting
• Available regardless of health
• Premiums based on age at conversion
• Usually permanent coverage
• Legally protected right
Portability
• Extends group coverage temporarily
• Often limited to 18 to 24 months
• Usually requires active employment before separation
• May require evidence of insurability
• Not available under all plans
Portability can expire. Conversion does not rely on continued eligibility. This is why conversion is often the only viable option for older or seriously ill employees.
Common Denied Claims Involving Conversion Rights
Many life insurance denials after job loss involve conversion issues, including:
• Insurer claims conversion was not requested
• Employer failed to provide notice of conversion rights
• Death occurred shortly after termination
• HR incorrectly stated coverage continued
• Confusion between portability and conversion
• Conversion forms delayed or lost
In these cases, insurers often deny claims automatically. With proper legal pressure, those denials are frequently overturned.
What Happens If the Insured Dies During the Conversion Window?
If death occurs during the conversion period, many policies still require payment of the benefit, even if the conversion application was never submitted.
Courts often hold that coverage remains in effect during the conversion window. If the insured was eligible to convert and died before the deadline expired, beneficiaries may still recover the benefit.
This is one of the most litigated and most successfully challenged conversion scenarios.
Can Beneficiaries Recover If Conversion Never Happened?
Yes, in many cases. Beneficiaries may still recover if:
• The insured was not notified of conversion rights
• The employer gave incorrect information
• Conversion paperwork was unavailable
• Death occurred within the conversion period
• ERISA notice requirements were violated
We have recovered substantial benefits where insurers argued coverage ended, but the employer’s failure to inform preserved the insured’s rights.
Key Takeaway
Group life insurance does not always end when employment ends. Conversion rights exist to protect employees at their most vulnerable moments. Insurers often deny claims by pretending those rights never existed or were missed, but courts frequently disagree.
If a life insurance claim was denied after job loss, retirement, or reduced hours, conversion rights should be examined immediately. These cases are highly fact specific and often very winnable.