Life insurance is something individuals buy to secure the lives of their loved ones financially once they leave. The proceeds from such a policy can help pay off outstanding debt and cover any pending sizable expenditure or day-to-day expenses. In many cases, the employers of salaried individuals provide them with group life insurance for the same reason.

While it showcases that the employer cares for you, a question lingers–is the group term plan enough to cover the needs and can help secure the dependents’ financial requirements once you leave. So, individuals consider having whole life insurance for additional cover.

This article discusses if getting whole life insurance with group term insurance is worth it.

What is group life insurance?

As the name suggests, group life insurance is a term insurance plan covering a group of employees. In most cases, the premium outflow is covered by the employer. It is the most straightforward insurance plan, which promises to pay the policyholder’s nominees a fixed sum on their demise. But given in a professional scenario where a lot of people are covered under the same policy, there are certain drawbacks these policies suffer from:

Job changes impact the policy that covers you

  • Given that group term insurance is linked to an employer, whenever you switch your job for any reason, you will have to face many issues.
  • The new workplace may not have a group life policy at all, or you may remain uncovered during the period of transition.
  • It can pose severe troubles if anything unwanted happens when you are without insurance coverage.
  • In contrast, also having an individual policy ensures that a job loss, shift, or anything else doesn’t impact the family as it would have otherwise.
  • So, yes, the total cover amount may diminish temporarily, but you would still have enough cover to support your dependent ones in crisis.

Group term insurance is not customisable

  • Group term insurance is for a group and not for an individual. Its primary objective is to cover the group’s overall risk and doesn’t pay heed to individual needs unless they form a majority.
  • So, it is imperative to understand that it may not cater to all your needs, and you will have to look for alternatives to cover the shortcomings.
  • In contrast, an individual whole life insurance plan considers your specific needs regarding your financial situation, medical conditions, liabilities, and more.
  • It enables you to find the right policy that provides optimum cover for all your needs. Given that it is specifically curated, it gives your dependents the best coverage under all circumstances, which is not the case with most group life insurance plans.

Advantages of group insurance 

It is cheaper

  • When you go to the market looking for an individual policy with a sizable cover and catered to your specific needs, you know that the premium outflow would make a massive dent in your savings.
  • In contrast, having a group term insurance provided by the employer would provide you with a good cover at a fraction of the cost.
  • In most cases, the employer’s premium outflow is partially or entirely borne outflow of such policies.
  • So, employees get the benefits of whole life insurance at subsidised rates, enabling them to reduce the coverage of individual policies without losing much.

Claims are easier to get

  • When you raise a claim against an individual whole life policy, the insurer can take a few days to complete the documentation and run the necessary checks before forwarding the due amount to your dependents.
  • It means that they will have a hard time if they run into a financial emergency during the waiting period. In contrast, claim processing is a swift affair with group policies, and the nominee receives the share at the earliest.

They do not require medical tests

  • Group term policies provided by the employers do not require every individual covered to undergo the stringent medical tests, which are otherwise the norm with individual whole life policies. It saves you the burden of experiencing a plethora of processes.

So what makes sense and what doesn’t?

In most cases, people are content with the group insurance plan provided by the employer. There is no doubt that these plans cater to the basic financial needs and would be sufficient to care for your dependents in your absence.

Also, can these cater to the elevated needs when there is a medical emergency and there are many monetary outflows required? If yes, you may not need to subscribe to individual whole life insurance separately, but seldom is it the reality.

So, if you believe that you require a cover at all times catered to your specific needs and will help you ensure that your beloved people remain safe, having whole life insurance and group life insurance should be the appropriate choice for you.

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