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What Is an Exit Benefit in Group Health Insurance?

Roocha KanadeNov 13, 2025

Are you currently considering switching your jobs? But what does that mean for your company-provided health insurance? When you move from one company to another, one of the biggest concerns is losing the group health cover. That’s where the exit benefit comes into play.

What exactly is an exit benefit, and how does it help you? Let’s find out in this blog.

Contents

Exit Benefit in Group Health Insurance
How Does Exit Benefit Work?
Who Is Eligible for the Exit Benefit?
Exit Benefit vs Portability
Advantages of Exit Benefit
Disadvantages of Exit Benefit
Why the Exit Benefit Matters
Final Thoughts
Frequently Asked Questions (FAQs)

Exit Benefit in Group Health Insurance

The exit benefit is also known as continuity or conversion benefit. As the name suggests, it lets you keep your health insurance coverage even after you leave a company. It gives employees the choice to switch their group policy to an individual health insurance plan with the same insurer. The good news? You don't lose any of the benefits you've already built up.

So, if you’ve already completed waiting periods for certain illnesses under your group policy, you don’t have to start over again. This way, your health coverage continues without any hiccup.

How Does Exit Benefit Work?

When you’re about to leave your organisation, you can request to continue your existing group policy in your own name. Here’s how the process usually works:

1. Notify Your Insurer or HR: Inform your insurer or HR department about your intention to continue your policy. It's best to do this a few weeks before your last working day.

2. Review Available Options:Your insurer will provide you with options for individual or family floater plans from their retail products.

3. Choose Your Plan: Select the coverage amount and plan type that works best for you.

4. Pay the Premium: Once you've made your selection, pay the premium to have the new policy issued.

5. Enjoy Continuous Coverage: With the new policy in place, your coverage will continue without any gaps. You will retain key benefits, such as:

Any waiting periods you've already completed
No-claim bonuses you've earned
Coverage for pre-existing conditions you've qualified for

For example, let’s say you’ve worked for five years at a company that offered a group health insurance policy with a ₹5,00,000 cover. During this time, the four-year waiting period for pre-existing diseases has already been completed.

When you leave the company, you can use the exit benefit to convert your group policy into an individual plan with the same insurer. It allows you to continue coverage without restarting any waiting periods.

If you don’t use the exit benefit, you would need to buy a new policy, and the standard waiting period of two to four years for pre-existing conditions would apply again.

Who Is Eligible for the Exit Benefit?

Not every policyholder automatically qualifies for an exit benefit. Each insurer sets its own eligibility rules, which commonly include:

You must complete at least six to twelve months of coverage under the group policy.
You should apply before or within 30 days of leaving the organisation.
The benefit is available only through select insurers and policies.
You must switch to a retail plan from the same insurer.
The insurer may ask for a health declaration or assessment before approval.

Exit Benefit vs Portability

Although both Exit Benefit and Portability help you retain coverage, they apply in different situations.

Feature	Exit Benefit	Portability
When Used	When leaving an employer’s group plan	When shifting between insurers or policies
Type of Transfer	From group to individual plan with the same insurer	From one insurer’s policy to another insurer’s policy
Continuity Benefits	Retains waiting periods and pre-existing cover	Retains waiting periods if the transfer is seamless
Medical Tests	Usually not required if applied promptly	May be required based on insurer assessment
Best For	Employees leaving jobs	Individuals switching policies

In short, the exit benefit is for employees leaving an organisation’s group policy. On the other hand, portability applies when individuals move between insurers or policies.

Advantages of Exit Benefit

Seamless Coverage: You stay insured even after leaving your job, without any breaks in protection.

No Waiting Period Reset: Any waiting periods already completed under your group policy continue in your new plan.

Easy Transition: You don’t need to start from scratch or deal with fresh waiting periods and paperwork.

Disadvantages of Exit Benefit

Higher Premiums: Once you switch to an individual plan, you’ll likely pay more since your employer no longer shares the cost.

Limited Time to Apply: You need to submit your request within about 30 days of leaving your organisation.

Fewer Plan Choices: You can usually move only to policies offered by the same insurer.

Health Declarations Required: Some insurers may ask for updated health information before approving your new plan.

Why the Exit Benefit Matters

Many employees overlook this option when they change jobs, assuming their health cover ends automatically. However, opting for the exit benefit can be very useful, especially if you or your family members have pre-existing health conditions.

It helps preserve the benefits you’ve built over the years. So you are not left without coverage during career changes. Considering the rising cost of healthcare, maintaining continuous protection can make a real difference.

Final Thoughts

The exit benefit in group health insurance allows you to carry your health coverage with you when you leave a company. It helps you keep your waiting period credits and stay insured without a break.

Before you resign, always check with your HR or insurer about this option. A simple step like activating your exit benefit can help you continue your health protection without any gaps.