Life insurance can be confusing, given the variety of different categories. Many people wonder about the differences between individual life insurance and group life insurance and whether they should choose one over the other or get both. No one likes to think about a future where either you’re no longer around or when something happened to make you lose your income, so understanding the right life insurance to protect you and your loved ones in either event is essential.
Here’s what you need to know about the differences between individual life insurance and group life insurance and what they both entail.
The Differences Between Individual Life Insurance And Group Life Insurance
In order to understand the differences between individual life insurance and group life insurance, you’ll first need to understand each policy on its own.
What Is Individual Life Insurance?
Individual life insurance is as the name implies – a policy that only covers you. This kind of life insurance will continue up to and, in some cases, beyond your retirement. When you get individual life insurance, you’ll have a premium your insurer levies based on several factors, such as your age, your profession, your current health conditions, the sum you want assured, and more.
For traditional individual life insurance plans, you can expect the premium to stay constant throughout the duration of the policy. Thus, it’s generally recommended that you buy individual life insurance younger than older, as this reduces the premium you’ll need to pay in order to obtain a higher coverage. Additionally, there’s the risk of losing eligibility when you’re older. The earlier, the better with individual life insurance.
What Is Group Life Insurance?
The majority of employers offer their employees group insurance plans that are partially paid for by the employer. One of the differences between individual life insurance and group insurance is that while you own your policy with individual life insurance, your employer owns it with group. Group insurances are only available to you if you’re eligible, and can be canceled at any time, either by the insurance company or your employer.
Group life insurance typically has a lower premium than individual life insurance. However, it’s important to note that in most cases, your premium will increase once you hit a certain age. In many cases, this means you can expect your premium to increase every five years, making it so that the older you get, the more you’re paying. Group life insurance generally only lasts as long as your employment, since it’s tied to your employer.
Thus, one of the key differences between individual life insurance and group life insurance is that while you’ll always have your individual policy, you can’t take your group policy with you once you leave your place of employment that’s providing it to you.
Is Group Insurance Better Than Individual?
Whenever people talk about differences between things, such as the differences between individual life insurance and group life insurance, they always want to know which one is better. Neither individual nor group policies are necessarily better than the other, but they do have definitive differences.
Some of the differences between individual life insurance and group life insurance are:
- Group insurance is based on a multiple of a salary while individual insurance is based on your needs.
- You own individual life insurance while your group insurance is group-owned.
- Group insurance is tied to the group, so when you leave your place of employment, you can’t take it with you. Individual life insurance stays with you regardless of where you work.
- Your premiums are guaranteed with individual life insurances, but not with group.
Is Group Insurance Cheaper Than Individual?
Yes, group insurance is cheaper than individual insurance because there are more people buying into the plan. Group insurance plans are meant to cover a large number of people, but they offer them all the same benefits. Individual insurance is more, but customizable to your needs.
Individual Vs Group Life Insurance: Which Is Best?
It depends on your needs. In general, it’s recommended that you have both individual and group insurance. That way, you have insurance regardless of your employment status that is best suited to you and also insurance that helps with your financial security even more. Thus, even if your employer offers group insurance, it’s important that you have an individual life insurance policy too.
Do You Need Life Insurance?
Insurance Unlimited Of Bozeman has a variety of life insurance policies that will meet all of your needs. Life insurance is an important part of protecting you and your family. Contact us today to learn more about the life insurance policies we have available.