Most group insurance plans allow for the conversion of certain benefits to “individual” plans at the time of termination or retirement. The benefits with this privilege generally apply to:
- Life Insurance
- Dependent Life (spouse only)
- Critical Illness Insurance
- Health and Dental
Here is where it gets tricky. The employee must apply for the conversion no later than 31 days following the date their employment ceases. The employer is the one held responsible by the courts in making sure these conversion options are made available to the employee. There are legal pitfalls that can come up for employers explaining what they offer if an employee doesn’t grasp the details.
The Supreme Court of Canada has said the employment relationship is a “special relationship”, characterized by a power imbalance in which the employer has the upper hand. Judges have often applied that principle and held employers liable when employees have not fully understood the terms of their benefit programs. Employer liability has been found even when the employer has given accurate information or urged employees to seek independent advice. That’s not enough, the judges say, in this “special relationship”.
At Life Plus Insurance we go to great lengths to protect our employer clients by making sure terminated or retired employees are made fully aware of their conversion rights.
If you are not currently getting this type of service, call us at 416 460 9848.