Before going further into discussing the limitations of a term life insurance, it is best to first know the definition of term life insurance and what it covers. Term life insurance offers coverage for a specific period of time. In the case of being an employee of a company, your term life insurance applies only during the duration of your employment.
As such, if unfortunate things happen to you, such as total permanent disability or death (most plans provide this kind of protection), you and/or your dependants will receive a pay-out. The amount, however, depends on the insurance plan that is provided by your employer.
An employer would generally offer term life insurance through the company’s group insurance plan, which comes with limitations. As briefly mentioned above, this term life insurance only provides coverage for the duration of your employment with your current company. In other words, if you resign from your current job or are being laid off, you will no longer be part of the company’s group insurance plan. There is no obligation from your former employer to continue paying for your coverage. Furthermore, your next employer may not offer the same term life insurance as part of their benefits.
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