Employer-provided life insurance usually stops within weeks of leaving the job. The reason lies in who owns the contract and how group pricing works.
The employer owns the policy, not the employee
Group life is a single master contract between an insurer and an employer. Employees hold certificates issued under that contract rather than owning policies of their own, which is the distinction everything else follows from.
Eligibility is defined by active employment. When the employment relationship ends, the certificate ends with it, typically at the close of that month rather than on the last working day.
Nothing was purchased individually, so nothing individual remains to keep, and the employee has no contractual relationship with the insurer to fall back on.
Group pricing depends on a captive pool
Group cover is inexpensive because it is underwritten on the workforce as a whole rather than person by person. Employees who would never shop for cover subsidise the rest.
That arrangement holds only while membership is set by employment. If departing workers could stay, the ones who stayed would skew toward those least able to buy elsewhere.
Ending cover at separation is what keeps the pool broad and the rate low.
Conversion and portability are the exits
Most group contracts allow conversion to an individual permanent policy without evidence of insurability, usually within about a month of coverage ending.
Some also offer portability of term cover at group-like rates. Both options are time-limited and easy to miss during a job change.
Converted policies are priced without medical underwriting, which makes them expensive for a healthy person and valuable for someone who could not qualify individually.
The amount was rarely sufficient anyway
Group cover is commonly set at a modest multiple of salary, a figure with no relationship to a household's mortgage, its other debts, or the number of years of income a family would actually need.
Because it arrives automatically and costs the employee little or nothing, it tends to be treated as the plan rather than as a supplement to one.
A separate individual policy is what actually survives a resignation, a layoff or a move to self-employment.
Retirement changes the picture again
Retiree life benefits, where they exist, often step down sharply after the first year or two, and employers can generally modify or withdraw them.
Cover that appeared secure at retirement can shrink to a token amount later, at the age when replacing it individually costs the most.
Checking whether the benefit is a contractual right or a discretionary continuation tells a retiree how much weight it can carry.