Insurance and risk coverage have become inseparable aspects of our lives today. With life becoming unpredictable and uncertain due to complexities, there is an imminent need to take a safety cover to safeguard your life and those of your loved ones. Considering these, the various insurance companies have introduced instruments catering to the specific needs of their clients. However, when you evaluate term life vs group life, you know the different criteria and factors to consider before investing in any insurance instrument. As you think about protecting your loved ones, insurance of life becomes a vital decision. As you decide between the two options, Term Life and
Group Life insurance, it is pertinent to know the positive and negative aspects of each. As each has its advantages and drawbacks, it is crucial to understand the comparison between both.
While term life promises to provide coverage for a specific period also called ‘term’, the group insurance coverage is applicable to everyone in the family. While it is important to understand the conditions and status of both, choosing any one can be a tedious decision especially when you are placed in a country like the United States.
Let us look at the various points of contention and assess the benefits and pros of each of the insurance types:
- Coverage needs: As you need to decide about the type of insurance guard you plan to proceed with, the primary thing is to evaluate the requirement for coverage that you need. If there is a need for a larger amount of protection, term life may come in handy to be a better alternative as it is economical and provides better coverage at a relatively lower premium. On the contrary, the group insurance generally taken up by your employer would look at the low-cost benefits to provide just the sufficient coverage required. Term life plans may be catered to suit your individual needs and can be tailored accordingly. However, most of the group plans are pre-planned and decided focusing on lowering the cost to the company.
- Budgetary limitations: It is wise to evaluate the budget available while taking up an insurance plan. Though term life appears to be more tempting and budget-friendly, in reality, the cost of availing an insurance cover in term life insurance can be taxing on your pocket. Although when high coverage amounts are involved, term life has a lesser premium amount making it more affordable, and user-friendly. The group plan, however, spreads the risk across a large group making the portion of premium pocket-friendly for the employees after the employer pays a chunk.
- Health considerations: Another prominent factor in deciding the type of insurance coverage is the health considerations, providing individual or group coverage. While an individual plan mandates a medical exam and certification in various aspects, in a group plan, there is no need to have a medical exam. This makes it suitable for all in general. It can, thus, help those people to get coverage, who otherwise might be unable or ineligible to get insurance coverage.
- Status of employment: As you gain stability in your job, the group policy becomes applicable. Thus, if the company decides to associate with a group plan, and you have been with the concern for a considerable time, it is advisable to be a part of the group life plan. This saves precious costs of paying hefty premiums, especially as you age, in addition to providing full coverage without any medical test or proof of ailment etc. Further, having an individual policy can be an added safety cover for you.
- Long-term planning: Insurance plans vary in their financial planning goals. When you are planning for the long term, the insurance coverage goal also varies. Besides, depending upon the age for availing the insurance cover, the plan can vary. While in youth, the term life option may be more popular depending upon the affordability, simplicity and flexibility, it is desirable for people in higher age groups to get insurance coverage under a group plan. It leads to the sharing of the cost of premiums with the owners and business companies and gives you protection even while you have the freedom to opt for another personal insurance. All this makes the planning process quite complex yet fruitful. As you target specific life stages, it is advisable to complement your overall plan with other options to suffice your primary coverage needs.
Thus, while term life insurance policies are easy to pay premiums, and provide flexible, and a high-end cover even for a low premium amount, the increasing costs of temporary coverage with no cash value over time can be detrimental in choosing term life plans. Similarly, the group plans offer ease of enrollment, since there are no medical test conditions. Alternately there are certain health benefits and additional coverage such as accidental coverage and access to additional services such as financial planning assistance. At the same time, group policies also have the limitation of limited coverage and portability issues in case you decide to change jobs or the cost of premium goes beyond your budget etc. Your insurance coverage is dependent upon the employment status and the company just opts for a one-size-fits-all principle to avail group policy.
Term life does not build cash value over time and offers high coverage at higher premium amounts. Group insurance appears to be cost-effective and economical. It is surely more convenient and tempting but since it provides limited coverage and is bound to your employment status, it is suitable to select a prudent combination of both coverage plans.
Conclusion:
While the terms life and group life have their respective advantages and disadvantages, it becomes important to understand each other before making any decision. As you analyze term life vs group life, try to attain a balance between your expectations and aspirations, in contrast to the choices favorable for your precious ones. Term life promises safety coverage on life while group coverage being cost effective has a limitation of providing limited coverage besides being tied to your employment status. Depending upon your personal choice and circumstances, in addition to considering your financial goals, pick up the insurance instrument and safeguard the future of the people who hold value in your life. While a combination of both can provide a comprehensive protection cover, you must evaluate the options yourself considering your situation and goals to meet your needs.
