Not long ago, it was common for an American worker to put down roots with one company, staying on board throughout their career until retirement—a tenure of 40 or more years. My, how things have changed!
Today, older American workers (ages 55 to 64) stay with an employer for a median of 9.8 years while younger workers (ages 25 to 34) stay for just 2.8 years.1 While this trend allows them to enjoy mobility and gain a variety of experiences, it certainly has drawbacks.
Group policy restrictions often require employees to end their coverage when they leave the company. This can put them in a bad situation where they have no coverage and feel that they wasted money on benefits they can no longer use.
"In an era when workers are switching jobs with much greater frequency than ever before, such restrictions are not appealing," says Bob Gaydos, founder of insurance software provider Pendella Technologies. "The combined Millennial and Gen-Z generations, which are set to become the dominant workforce demographic in the next few years, are particularly averse to such non-portable benefits."2
With younger generations gaining prevalence in the job market and changing jobs often, one thing becomes clear: workers want benefits that they can take with them when they leave. This describes portability.
What is portability?
Portability is a policy feature that provides the option to continue coverage for an insured and their covered dependents after it would otherwise end. The coverage shifts (or "ports") from being part of a group policy to being a standalone individual policy.
Portability is typically elected in one of these scenarios:
- When the employee leaves the company that sponsors the coverage
- When the employee becomes ineligible in a certain group coverage class
- When the employer terminates the product from its benefit offerings
Generally, ported policies retain the same level of coverage and the same terms and conditions as those provided under the group policy.
A policy "rider" (add-on coverage on top of a base policy) may or may not be eligible for portability. For example, if an employee has a whole life insurance policy with a long-term care rider, their carrier may allow them to port their life policy, but not the long-term care rider.
Will portability increase my premiums?
There is usually no increase in premiums when someone ports to an individual policy. If they continue coverage without the associated riders, as described above, the change in coverage will actually lower their premium amount.*
What is required from the insured?
First, the insured must apply to continue coverage within a certain time frame after the group coverage ends (aka the termination date)—usually within 30 days.
Then, the insured must pay for their premiums directly to the carrier. Instead of payroll deduction under the group policy, they will receive a monthly statement for their premiums. As with other monthly bills, automatic bank account withdrawal options are typically available.
Portability options from Allstate Benefits
Great news—Allstate Benefits offers portability with many of its products! While the feature is a small policy perk, it provides the flexibility that today's employees are seeking. It's perks like these that give employers the edge in a crowded job market.
Portability options are available for Accident Insurance, Critical Illness Insurance, Hospital Indemnity Insurance, Disability Insurance, Cancer Insurance and Life Insurance (both term and permanent life insurance).
Contact an Allstate Benefits representative to learn more about portability and how it can enhance your benefits portfolio for you and your employees.
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