15-09-2022 |
In recent years, there has been an increase in the awareness of buying life insurance plans to protect the financial future of your loved ones. However, the varying needs of people have resulted in the launch of different types of life insurance plans. In this article, we will be talking about a group term life insurance policy offered by employers.
This will help you ascertain if the group life insurance offered by your employer is sufficient or if you need to buy an individual insurance policy.
Group Term Life Insurance Meaning
Many employers offer term life insurance policies to their employees as a perk or an incentive. These policies offer financial assistance to the family of every covered employee in case of an unforeseen event. In group term insurance policies, the employer is the owner with multiple employees insured under it. The employees are not required to undergo any medical tests. These plans are valid as long as the employee is working with the organisation.
What is Individual Term Insurance?
As an individual, you can purchase a term insurance policy to provide financial protection to your loved ones after you are gone. Since this is an individual plan, you can choose the tenor, coverage, and riders# based on your needs.
Group Term Life Insurance & Individual Term Life Insurance
Here are some facts about group life insurance and individual life insurance plans:
Aspect |
Group Term Life Insurance |
Individual Term Life Insurance |
Coverage |
The policyholder has no control over the coverage. The scope and extent of the coverage are ascertained by the employer. |
The policyholder has complete control over the tenor and sum assured of the policy. |
Validity of the plan |
If you leave your job, then the group insurance policy ceases to be valid. While some insurers might allow you to port the policy, the premium could be more. |
Individual term insurance plans stay active as long as you continue renewing them on time. |
Customisability |
You cannot customise a group term insurance plan. |
You can customise an individual term insurance policy based on your requirements |
Who can cancel the policy? |
The employer can cancel the policy at any time due to any reason |
You can cancel individual life insurance whenever you want |
Tax* Benefits |
Tax* benefits are not available under group term insurance plans |
Individual life insurance plans offer tax* benefits |
Some more details answered:-
When a company offers group insurance, it calculates the sum assured for individual policies based on the average risk calculation. Hence, it might not offer adequate coverage for your needs. If your employer is providing group insurance, then before choosing to buy an individual term insurance plan, make sure that you assess your insurance requirements.
While there are group-term life insurance benefits, there are certain disadvantages too.
You can look for suitable life insurance plans from Tata AIA Life insurance to secure yourself and your loved ones. Also, you can customise the policy as per your needs.
Conclusion
To summarise, both plans offer coverage and customisability. If your employer is offering group insurance, then you must go through the policy documents to understand the scope and extent of the coverage. This can help you assess if the policy is enough or if you need to save in an individual term insurance policy.
L&C/Advt/2022/Sep/2124