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Group Term Life Insurance Vs Individual Term Insurance: Know the Difference

Deciding between various life insurance options can be taxing as you would want to opt for the best. Often the cause for confusion can be choosing between group insurance and an individual term insurance plan. If your employer is already providing you with a group life insurance policy, then the obvious question points towards the need for an individual plan.

To help you understand both these insurance policies in detail, let’s explore the difference between group life insurance and term life insurance. This shall enable you to find out if you really require a personal term life insurance for better coverage.

What is Group Term Life Insurance?

Group life insurance is a policy offered by the employer of an organisation to its employees as an added incentive. Here, the employer of the company is the owner of the insurance policy with numerous employees secured under it.

The insurance plan is meant to provide financial support to your family in case of an unforeseen event. If you opt for group term life insurance provided by your employer, the policy won’t require any medical verifications, and the premiums would be affordable.

However, you must also understand that group life insurance plans are available as long as you are employed with the said organisation. If you were to switch jobs, your term insurance coverage would end with no assurance that the next employer would offer you insurance.

What is Individual Term Life Insurance?

An individual or personal term insurance plan is a type of policy that enables you to safeguard your loved ones in your absence. In case something were to happen to you, the insurance provider would pay out the sum assured to the beneficiary of the plan.

Unlike group term life insurance, you can personalise your individual insurance policy based on your needs. Be it the policy period, rider benefits or the coverage amount, personal term insurance helps you customise these aspects without any trouble.

Depending on the reason for buying term insurance, you can choose a suitable policy tenor that can range from 5 to 30 years! So, if you have any pending debts or want to financially protect your dependents during retirement, you can select a policy term accordingly.

Difference Between Group Life Insurance and Term Life Insurance

Here’s a comparative view of group life insurance vs individual term life insurance based on various factors:

Factors

Group Term Life Insurance

Individual Term Life Insurance

Insurance Coverage

The coverage available under group life insurance is limited to the terms and conditions set by the employer. Thus, you cannot choose the term insurance coverage for your policy.

The coverage for individual term insurance has no cap as such and you can pick a suitable sum assured for your policy. Based on your insurance requirements, you can compare various insurers and opt for a suitable coverage option.

Premium Amount

The premium price for group insurance is more affordable when compared to individual plans. However, the premium amount may increase with age.

The premium amount for individual term insurance is higher when compared to group insurance. But, the premium shall remain constant throughout the policy period.

Continuity of Policy

You cannot continue the group term insurance if you switch or lose your job. There might be an option to port the plan but it could lead to higher premiums.

Your personal life insurance shall continue to be in force unless you do not pay the premium and the plan lapses.

Customisation of Plan

Group term insurance cannot be customised.

Individual term insurance can be customised to suit your insurance requirements.

Cancellation of Insurance

Group term life insurance can get cancelled by your employer due to several reasons.

Individual term insurance can only be cancelled in the event of policy lapse.

Tax Benefits

You cannot claim tax benefits for your group insurance plan.

You can claim tax benefits on the premium amount as well as the death benefit available under individual insurance.

Over to You!

Now that you know how individual term life insurance offers much more coverage than group insurance, you can financially secure your dependents. Due to the uncertainty of life, term insurance is an essential backup against the risk of death. So, before opting for it, estimate the premium price for a policy with our term insurance premium calculator! Furthermore, you can browse through the term insurance plans available at Finserv MARKETS to enjoy maximum coverage.

FAQs on Group Term Life Insurance Vs Individual Term Life Insurance

  • ✔️What are the disadvantages of group term insurance?

    Some key drawbacks of group term insurance can be the lack of customisation available under the plan. As the insurance needs of every employee vary, a uniform term life insurance plan may not be suitable for all individuals.

  • ✔️Does group term life insurance have a cash value?

    No. As term insurance is a pure risk cover, usually such policies do not have a cash value. Therefore, your group term life insurance won’t have a cash value.

  • ✔️Can I avail loan against my individual term life insurance plan?

    No. As term insurance does not have a cash value, you cannot borrow or take a loan against your policy.

  • ✔️What happens after the policy period of my term insurance runs out?

    After the policy period of your term insurance plan runs out, the plan shall expire. Moreover, you will not receive any maturity benefit under the policy, unlike other life insurance plans. However, you can surely avail a survival benefit under the term plans with return of premium.

  • ✔️How can I buy term insurance online at Finserv MARKETS?

    To purchase a term life insurance plan at Finserv MARKETS, follow the steps mentioned below:

    • Visit the ‘Term Insurance’ section on Finserv MARKETS

    • Input the required information in the application form

    • Review the coverage and policy terms

    • Add any suitable riders

    • Pay the premium online

    • You shall receive the term insurance policy document on your registered email ID

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