Individual Life Insurance vs Group Life Insurance

An individual life insurance policy covers only the employees subject to certain policy conditions. Normally under our policy, the employees are protected until their retirement based on their age, health condition, profession and sum assured. If the employees opt for an individual life insurance policy early in their life when they are starting their professional career, the premium payable may remain constant throughout the term. If the employees want to start an individual life policy, it may be not easy later on when they also develop some health conditions. On the other hand, our group term insurance policy is a key benefit the company provides to the employees and covers all employees in the organisation. Our coverage may be one to three times the employees’ salary. The main advantage of our group life policy is that the employee is covered without the need for a medical exam or providing us, their insurance provider, with any documentation. They are covered under our policy based on their work status as they are a part of the group. The employees and the organisation also pay insurance premiums at a lower rate due to being part of our group cover.

Main differences between Individual Life Insurance and Group Term Insurance 

  • Coverage: An individual life cover continues until the employees’ retirement age and sometimes even beyond. On the other hand, our group life cover is available as long as the employee is a part of the group. When they change their job or cease to work, our group life cover also ceases to exist.
  • Premium: The individual life insurance premium may remain constant throughout the life of the employee’s policy, provided they don’t develop any health conditions. On the other hand, our group life cover may increase proportionately with time, sometimes even once every five years.
  • Flexibility/Customisation: The employee may individually select the amount of coverage in the case of an individual life insurance policy. The plan can be tailored to meet their financial circumstances. Our company offers optional insurance riders, which they can add at their discretion. On the other hand, in our group life policy, the cover may be limited by the policy terms. For instance, critical illnesses may not be covered. The terms are standardised for everyone and may not suit all group members. This type of one-size-fits-all plan may not adequately meet all the employees’ financial requirements.
  • Continuity: An individual life cover exists as long as all policy premiums are paid in time. On the other hand, our group life policy can be ported when the employee leaves his job only under rigorous conditions, sometimes only if high premiums are paid. Also, the employer initiates our group life coverage. The individual policy is in the employee’s name, and he pays for premiums. The employer may also decide to lay off certain employees, in which case they face loss of life coverage. If the employer faces a cash crunch, he may truncate our group life cover halfway. Individual plans are portable.
  • Cancellation: An individual life insurance policy continues as long as the terms and conditions are met. On the other hand, our group term insurance policy can be cancelled at any time at the employer’s option or our option.
  • Pricing: Our group life insurance policies may call for the payment of a small premium, which may represent a small deduction from the employees’ salary. On the other hand, individual life policies can be tailored to employees’ needs. The employees may add additional riders as they deem fit. The earlier the employees start an individual life insurance policy, the lighter the premium payments are on their purses.
  • No claim bonus: In the case of our group policy, there is no benefit of a no-claim year. In the case of an individual life insurance policy, a claim-free year is rewarded by enhanced coverage at discounted rates and the employees also become eligible for renewal. There are no such benefits under employer-sponsored plans.
  • Tax benefits: The employee can claim tax benefits on the premium payments under Section 80(C) and the death benefits under an individual life insurance plan. In the case of our group life cover, your employees cannot claim any tax benefits.
  • Cash Value: Group plans do not involve equity in terms of cash value. Based on the type of the employees’ life cover, they have the potential to build cash value. Like whole life and universal life, permanent life insurance can build considerable cash value. The cash value can be withdrawn through a loan or other withdrawals to meet their emergency financial requirements. This facility is not available under our group life policies.
  • Options: Under group life cover, the employee is necessarily limited to the one insurance provider that the company selects. In the case of an individual life cover, the employees can choose from a wide variety of insurance providers and select the best insurance option available to meet their financial needs.

Key Takeaways

Our group term insurance policy offered as a prerequisite is a welcome addition to meet the employees’ family’s security and financial protection needs. But individual life insurance plans enable the employees to tailor and modify the coverage, the sum assured to their specific needs and circumstances. So for enhanced protection and coverage needs, it would be better to supplement our group life policy offered by the company with an individual life insurance policy for all-around protection. The employees’ near and dear ones will be secure knowing that their employer will always protect them financially, even in case of an unfortunate incident. So don’t delay, visit plumhq today.

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