Insurance: A life insurance policy is generally considered an important part of long-term financial planning. Not only this, life insurance also gives peace of mind as it is meant to secure you and your family financially. In India, life insurance is broadly classified into two types – regular individual life insurance policy and group life insurance policy.
Individual Life Insurance
As the name suggests, Regular Individual Life Insurance is bought by an individual and he can cover his family member under the plan. You can choose a policy according to your needs and continue with it till the time of your retirement or sometimes even later. The premium for such policies depends on the type of policy purchased, the term of the policy and the Sum Assured.
group life insurance
On the other hand, a group life insurance policy covers a group of people. It is generally issued by the employer. It covers all the employees of the company under one plan. All the formalities are completed by the employer during the purchase of life insurance. Hence, group policy is available only when you are employed.
Individual Vs Group Life Insurance
Both, individual life insurance and group life insurance plans, have their own set of features. Both have their advantages and disadvantages. Take a look at what is the difference between these two:
Price: Unlike individual plans, group plans are more affordable. You are not required to pay the premium separately. A small amount is deducted from your income as policy premium.
Flexibility: An individual life insurance plan gives you the freedom to choose the coverage amount, riders, premium payment mode etc., but a group life insurance policy does not give you any of these flexibility. The terms and conditions are set by the employer and the insurance company.
No Claim Bonus: In a regular policy, the insurance company gives a no claim bonus for every claim-free year. But, under a group insurance policy, you do not get any benefit for a claim-free year.
Coverage: The coverage amount under the group plan is limited as per the terms and conditions set by your employer. No such limit is applicable when you buy an individual life insurance plan.
Validity of the policy: Since the employer offers a group life insurance policy, you can enjoy its benefits as long as you are working with the company. However, as long as you keep paying premiums and renewing the policy, the regular policy remains valid.