We understand that life changes – and so do members’ needs. That’s why, when an employee withdraws or retires from a Group Risk arrangement, they have the option to convert their existing risk cover to an individual policy with Old Mutual Protect, without the inconvenience of additional and strenuous medical underwriting.
The employee can convert up to the amount of their existing cover to a retail policy, ensuring that they are not left without coverage and protecting both themselves and their loved ones. And while a cotinine test will be required if the member indicates a non-smoker status on the application, no further underwriting is required.
The Conversion Option is generally attractive to people who:
- Are leaving the service of an existing employer, but not moving to other employment
- Might not have the same level or in fact any life cover with a new employer
- Are in poor health and might have their application declined following a medical underwriting process
- Would be required to pay a higher risk premium (health loading) following a medical underwriting process
- Could have certain health exclusions following a medical underwriting process
- Retire with the peace of mind of no strenuous medical underwriting (a disability income claimant who remains insured for life cover may also convert life cover upon withdrawal or retirement).
How to activate the Conversion Option
Upon exit, the employer should inform the member that the Conversion Option is available, and that they have 60 days (or 31 days in respect of Alexander Forbes’ standard policy arrangements) after their last active day at work to exercise this option.
Members can either contact Old Mutual directly or mandate their adviser to obtain the Conversion Option certificate and necessary quotations (download the full brochure for details on how to request a certificate). GAP will produce the certificate and send it to either the member or their personal financial adviser, who will then prepare the required quotation(s).
Important notes
- Time is of the essence: The member has 60 days from their last day of employment to submit an application to Old Mutual Protect. Failing this, full medical underwriting will be required – so be sure to act quickly and allow sufficient time for the quotation and submission of documentation.
- Standard rates apply: The new cover under the individual policy will be quoted at standard rates based on your individual profile (smoker or non-smoker rates) at the time of exiting the group arrangement. Any exclusions and/or health loadings that were applicable under the group policy for the individual, however, will be carried across to the individual policy.
- Cover transition: Group cover ceases when the employee leaves their employer’s service or withdraws from the Fund. If they submit the application within 60 days of leaving, they remain covered for their risk benefits during the 60-day period, if the Group Risk policy makes provision for the Conversion Option.
- Medical requirements are minimal: Only a cotinine test for non-smokers is needed.
- It’s a new policy: The individual policy will be issued in the member’s personal capacity, and they will pay premiums directly to Old Mutual for this policy.
- Additional considerations: Old Mutual may conduct financial underwriting to ensure that the requested cover is appropriate and does not result in over-insurance.
What’s the value?
The Conversion Option offers employees a seamless, cost-effective transition without the inconvenience of traditional medical underwriting. It ensures that their cover will be accepted regardless of changes in their health over time, while avoiding the higher costs and penalties that come with obtaining new policies later in life. In short, it maintains protection without the extra charges.
Employers also benefit from the Option, gaining an enhanced employee value proposition, as well as the financial peace of mind that allows their employees to focus on their work. The result: increased productivity and employer peace of mind. Win-win.