Changing group life insurance carriers is pretty common for employee benefit administrators. And for most employees, the process is seamless—perhaps even unnoticeable. But employees not actively at work on the new policy’s effective date could find themselves cut off from coverage—often when they need it most.
Luckily, many carriers include continuity of coverage provisions in their contracts to help protect these employees. “No-loss/no-gain” provisions enable the new carrier to continue providing life insurance at the lesser amount of coverage provided by the them or prior carrier.
How continuation of coverage works
Under the no-loss/no-gain provision, employees who are not actively working due to an injury or illness will not lose coverage, nor will they gain additional coverage. These employees can choose to extend their current coverage for up to 12 months from the date they were actively at work. If the employee returns to actively at work status, they’ll generally be eligible to enroll in the new carrier’s standard employee coverage.
Making the transition
When making the switch to a new carrier, employers may be asked to provide a list of all their employees not actively at work. That new carrier may want to get a better understanding of the situation and could ask questions like:
- When was the employee last actively at work?
- What is the reason for the absence?
- What is the expected return date?
Fair treatment for employees not actively at work is both a requirement and a best practice for employers. No-loss/no-gain provisions help ensure that new group life coverage benefits all parties—the employer, actively at work employees and those who are absent.
To learn more about continuity of coverage, please read our Inside Track educational paper.