Individual policies are owned by a single person and can be permanent or fixed-term. Group life insurance, on the other hand, is usually offered as an employer-sponsored benefit. When purchased as an individual policy, life insurance can be permanent or last for a specific period of time (also known as the “term”). In the case of group term life insurance, the term and amounts of coverage are usually set by the employer.
Many people choose to have both individual and group life insurance for greater protection. Health insurance offered to employees by an employer or by an association to its members is called group coverage. When you take out a basic individual life insurance policy, your monthly payment is fixed for the entire term. On the other hand, as you age, the premium for a group plan may increase accordingly. An individual policy is one that you buy on your own, completely independent of your employment situation.
Nowadays, job benefits include things like a predictable salary, paid time off, health insurance, and even employer-sponsored life insurance. On the other hand, the employer or the issuing insurance company can cancel a group life insurance plan. Term life insurance can be a good option for many families because of its simplicity and affordability, but there are also other types of life insurance options without medical examination. Other online life insurance options may still require a medical exam to determine coverage amounts or applicants. Most group term life insurance policies end when you leave your job, whether you get fired or retire.
Your individual insurance policy can be customized to your needs, unlike fixed-term group life insurance. However, each insurance company has its own underwriting process, that is, the process by which the insurance company determines if it can accept the risk of a life insurance applicant and, if so, on what basis, to collect the corresponding premium. Some other insurance products offer a cash value component, which can be intriguing, but which often results in higher life insurance premiums. The traditional way to apply for a life insurance policy can include medical exams, laboratory tests, and in-person interviews. Understanding the difference between group and individual life insurance is essential when deciding which type of policy is right for you.
Individual policies are purchased for a single person and are tailored to their needs, while group policies are usually provided through employers and are part of their benefit package. Both policies provide death benefits to beneficiaries, but beyond that there are many differences between the two types of life insurance plans. If you die during that time, the insurer pays your beneficiary (the person you choose to receive the benefit) the life insurance payment.
