Many companies offer employees group life insurance as part of their benefits package. Although group life insurance is a valuable protective measure, it may not be fully covering you as you thought. Take a look at the differences between group life insurance and individual life insurance so that you can make the best decision for your unique situation.
Who it Covers
As the name suggests, group life insurance covers an entire group of people. The policy owner is usually an employer and the policy covers the employees or members of the group. As the policy owner, the employer keeps the actual insurance policy, and those who are covered by the policy receive a certificate of insurance that serves as proof of insurance.
Individual life insurance is an insurance policy that covers an individual. The individual pays for the premiums, and they receive the master contract. It’s intended to cover the financial needs of a surviving spouse or other family members if the policyholder were to die.
Differences in Cost
Since employers typically offer group life insurance to their employees, they will usually pay for most, and in some cases all, of the premiums for the group life insurance policy. Either way, premiums for a group life insurance policy is usually significantly less expensive than individual life insurance policies. That is because employers receive a discount on group life insurance policies due to distributed risk. Individual life insurance is usually more expensive than group life insurance because the policy covers one person, and all of the risks are concentrated on one person.
Benefits
Both types of insurance offer benefits. Some of the benefits that come with group life insurance include:
- Minimal or no medical underwriting
- Income tax-free death payout
- Potential to add additional coverage for dependents
Some of the benefits that are associated with individual life insurance are:
- Guaranteed or flexible premiums
- Potential to build cash value
- Portable
It’s up to the individual to determine if the benefits of having individual life insurance outweigh the additional costs. Most people who want more coverage decide that it is worth spending additional money on individual life insurance.
Let’s Get You Insured
Looking for more coverage? Freedom Insurance Agency has got you covered. Our Maryland life insurance agents can find you the best individual life insurance that will protect your loved ones if something were to happen to you. Contact us today to receive a FREE quote.
