What Happens to Employee Insurance When Someone Leaves? Understanding Continuation Options
One of the most valuable parts of offering group insurance to your team is the peace of mind it provides. But what happens when an employee decides to move on from your business? Do they lose all that cover the day they walk out the door? Thanks to continuation options, the answer is no.
As an employer, it's important to understand and communicate this benefit clearly. Continuation options allow employees to transfer their group insurance policy into a personal one when they leave your company—without having to go through medical underwriting again. Here’s what you need to know.
What Is a Continuation Option?
A continuation option is a feature in many group insurance schemes that allows employees to continue their insurance as an individual policy if they leave the business. This could include cover such as life insurance, income protection, trauma cover, or medical insurance, depending on the policy.
The key benefit is that there are no new medical questions, no health checks, and no underwriting—as long as the option is exercised within the required timeframe, which is usually between 30 to 90 days after leaving employment.
Why It Matters for Employees
Many employees may not realise that if they tried to apply for the same insurance later, they’d usually have to go through full underwriting. This could result in exclusions or even a declined application if they have health conditions. The continuation option helps protect their insurability by letting them carry their cover over while they’re still eligible.
This provides them with ongoing financial protection during a career transition and peace of mind knowing that their insurance won’t lapse suddenly. It also gives them the opportunity to lock in their current health status before anything changes, making it a highly valuable option.
Why It Matters for Employers
While the continuation option is entirely optional for the employee, offering and explaining it clearly can reflect positively on your business. It shows care for employee wellbeing beyond their time at your company and helps build trust and satisfaction with your overall employee benefits offering. Having a clear process for this also reduces panic or confusion around what happens to insurance when someone resigns or retires. This is especially important during offboarding or redundancy conversations.
How Does It Work?
The continuation process is designed to be simple. When an employee leaves the business, they should be informed of their continuation option, ideally in writing. If they wish to take it up, they need to contact the insurer or adviser within the eligible timeframe. The policy is then transferred to a personal plan—sometimes with slightly different terms or pricing, but the cover remains largely intact.
At Employee Lab, we help employees through this process so that employers don’t need to manage it themselves.
A Last Word on Continuation Options
Continuation options are a powerful but often overlooked part of employee insurance. They give staff the chance to keep their cover without reapplying or losing protection, even after they’ve moved on. By understanding how continuation works, you can offer better support and clarity to your team—and reinforce your commitment to their long-term wellbeing.
If you’re reading this, chances are you’re an employer who genuinely cares about the wellbeing of your people. At Employee Lab, we offer two key services designed to support healthier, more engaged teams.
Pulse is our employee portal, giving your team access to practical resources on financial, physical, nutritional, and mental wellbeing.
We also offer Group Insurance, providing employees with access to life and health cover—often without the medical hurdles they’d face on their own.
Even better, employees covered under our Group Insurance automatically receive a subscription to Pulse at no extra cost.
Get in touch with us to find out how these services can make a meaningful difference in your workplace.