Vesting (Group Insurance)

In the context of group life insurance, vesting refers to the point at which an employee becomes entitled to keep employer-provided life insurance benefits upon separation from employment. Unlike defined contribution retirement plans, group life insurance typically does not vest in the same way — coverage usually ends when employment terminates unless a portability or conversion option is exercised. In some executive benefit arrangements involving company-owned life insurance (COLI) or split-dollar plans, vesting schedules determine when the employee's interest in a policy — or in the policy's cash value — becomes fully owned and non-forfeitable. Vesting provisions must be clearly disclosed in the benefit plan documents.