Can you keep your group life cover when changing jobs? Portability, conversion and continuity explained

When your employment ends, cover under an employer-sponsored group risk arrangement — life, disability and critical-illness cover — normally stops. Some schemes give departing members a chance to continue protection through portability or conversion, but those options are time-sensitive and governed by the policy terms.

What portability and conversion mean

Portability lets you keep the group policy in force after you leave, typically at the same group rates and with the same policy structure, while you pay the premiums yourself. Conversion changes your group cover into an individual policy issued in your name and priced for your age at exit. Conversion is usually offered without full medical underwriting, although insurers may require specific checks such as a cotinine test where smoking status is relevant.

Both routes avoid the need to apply for a new individual policy from scratch and so reduce the risk of being declined or loaded for a health condition that arose while you were on the group scheme. Conversion policies, however, are generally more expensive than the group rates.

Timing and eligibility: the clock is short

The option to convert or port is strictly time-limited. Depending on the insurer and scheme, departing members typically have between 31 and 60 days from their last active day at work to apply. For example, Alexander Forbes’ standard arrangements commonly use a 31‑day window, while some providers (including Sanlam in many cases) allow 60 days. The documented research contains no general provision for extensions, so these windows should be treated as firm unless the specific policy says otherwise.

Insurers and schemes also set eligibility rules. Discovery requires members to have been employed by the policyholder for at least 12 months before conversion is available, and conversion must be exercised before the plan’s maximum age limit. Sanlam’s conversion option applies only to South African citizens or permanent residents. Members should check their own scheme rules for any additional conditions.

What carries across to the converted policy

When conversion is available, insurers typically guarantee issue of an individual policy without extensive medical questions or many tests. Members are generally not given new medical exclusions or premium loadings for pre‑existing conditions that were covered by the group, unless those restrictions already applied to voluntary or additional cover within the group arrangement.

Waiting periods that applied on group benefits usually remain in force after conversion. For disability-income cover, the usual waiting period on group schemes is about three months, though actual periods vary by policy and by insurer.

Tax treatment: approved versus unapproved benefits

The tax consequences depend on whether the group cover is provided through a registered retirement vehicle (approved benefits) or as a standalone policy (unapproved benefits).

• Approved benefits are provided through a tax‑approved pension or provident fund. Premiums are typically paid by the fund and are generally not treated as a fringe benefit for employees. Death benefits paid from retirement funds are taxed according to retirement fund lump‑sum tables and are distributed under the rules of the fund, including Section 37C of the Pension Funds Act.

• Unapproved group risk cover is a separate insurance policy not linked to the employer’s retirement fund. Employer contributions are taxed monthly as a fringe benefit for the employee, but death benefits under the unapproved policy are paid to appointed beneficiaries free of tax (though the lump sum may be subject to estate duty).

Converting an unapproved benefit to an individual policy changes the arrangement: you pay the premiums directly and the fringe‑benefit treatment no longer applies. Tax advice from a professional is advisable because the rules and personal circumstances vary.

Who gets paid: beneficiaries and cessions

For unapproved cover, completing a beneficiary nomination form is essential if you want proceeds paid directly to named beneficiaries. If no valid nomination exists, the insurer will typically pay the benefit into your estate, where it will be applied to debts and estate administration.

A cession (for example, a mortgage bond cession to a lender) takes priority over a beneficiary nomination: ceded rights are paid first. For approved fund benefits, trustees must distribute proceeds in line with Section 37C, which can override beneficiary nominations to ensure dependants are provided for. By law you cannot nominate your employer as beneficiary, and insurers generally require beneficiaries to have a South African bank account for payment.

Documents to get, and whom to ask

Before you leave, request from HR or the benefits administrator:

• The group scheme rules or a policy summary showing conversion and portability terms, time limits and eligibility.
• An in‑service certificate confirming membership dates, cover amounts and any loadings or exclusions.
• Beneficiary nomination forms and acknowledgement that your current nominations are on file.

Public guidance on how to obtain these documents was limited in the research; your employer or the insurer named on policy communications is the practical first contact.

Practical checklist (supported steps)

• Confirm whether your scheme offers portability or conversion and the exact deadline (31 or 60 days), counting from your last active day. Set a clear reminder.
• Ask HR for scheme rules and an in‑service certificate.
• If available, request conversion and portability quotations and compare the cost with a fresh individual policy.
• Complete application forms and any required medical questionnaires or tests (such as cotinine tests) promptly.
• Ensure beneficiary nominations and any cessions are up to date, and keep copies of all correspondence.

If you miss the window, the group cover will lapse and a new individual policy will require full underwriting; that can mean exclusions, premium loadings or being declined. The options and rules vary between insurers and schemes, so check the exact terms that apply to your policy and consider professional tax or financial advice where needed.