Why is the Premium Lower in a Group Term Policy?

Choosing the finest life insurance policy from your many available options might be a difficult task. Selecting between group insurance and an individual term insurance might be difficult. If your company provides group life insurance, whether you still need your separate policy arises naturally.

Let’s dive deep into the differences between group life insurance and term life insurance to help you better grasp the ins and outs of both products. This method will help determine if you need a personal term life insurance policy for increased security.

Group-term insurance defined

Employers often provide group life insurance as an extra perk for their staff members. Here, the firm, as an employer, owns the insurance coverage that protects its many workers. The insurance policy’s purpose is to safeguard your loved ones’ financial security in the face of tragedy. Group term insurance offered through your employer, doesn’t necessitate any health examinations and has low monthly costs. As mentioned above, you should also know that group life insurance plans are available to you for as long as you remain employed with the company. There is no guarantee that a new employer will continue your term insurance policy if you decide to switch employment.

So, what exactly is private-term life insurance?

Having a personal or individual term insurance policy in place is a great way to give your loved ones financial security in the event of your untimely demise. If the unthinkable were to happen, your beneficiary would receive the sum assured from the insurance company. Your own term life insurance policy can be tailored to your specific requirements, unlike standard group policies. Personal term insurance allows you to easily modify the policy’s duration, rider benefits, and coverage amount to suit your needs.

The length of your term insurance coverage, known as the ‘tenor,’ might be anywhere from five to thirty years. You can tailor the length of your policy to your needs, such as paying off debt or providing for your family once you retire. It even has its own term insurance tax benefits.

* Currently, there are 2 tax regimes in India – new and old. To get the tax benefit you desire, choose the correct one after consulting an expert. You can opt for a regime change during the next financial year.

Distinctions Between Term Life Insurance and Group Life Insurance

Let’s look at some of the key differences and similarities between group life insurance and term life insurance for individuals:

Protection against Risk: The employer determines the terms and conditions of group life insurance. Therefore, the policy’s term insurance coverage is predetermined. Whereas there is no predetermined limit on the amount of coverage provided by individual term insurance, you can choose a sum that best suits your needs. To find the best insurance policy that suits your needs, shop about and compare quotes from multiple providers.

The Cost of Insurance Premiums: Compared to the cost of an individual policy, the premium for a group plan is more reasonable. On the other hand, the premium can rise as you get older. Individual term insurance premiums are more costly than those for group term insurance. However, the cost of the premium will stay the same during the term of the insurance.

Maintaining Status Quo Policy: If you leave your current employment or are let go, you will lose your group term insurance. You can port and take the plan with you if you leave, which may result in higher rates. On the other hand, until such time as your premium is unpaid in full and the policy is allowed to lapse, your life insurance policy will remain in effect.

Tailoring of Strategy: It is impossible to personalise the group’s term insurance coverage in any manner. Whereas the individual requirements can be accommodated when you purchase personal term insurance.

Withdrawal of Insurance Coverage: Your employer could cancel your group term life insurance policy for several reasons. If an individual’s term insurance policy has expired, this is the only circumstance under which it can be cancelled.

Fiscal Advantages: The premiums you pay for the group health insurance plan your employer provides are not tax deductible. The premiums that are paid for individual insurance and any death benefit that is received fall within the term insurance tax benefits category. As a result, both of them are eligible for tax deductions.

The final decision is up to you

You can protect your loved ones financially now that individual-term life insurance provides far more protection than group insurance. Term insurance protects against unexpected, unfortunate events because of life’s unpredictability. Please take a look at our term insurance premium calculator to get an idea of how much your premium will be before you commit to a policy. Furthermore, many options for term insurance policies can be seen and purchased online.