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Group Life Insurance vs Individual Life Insurance

The most elementary difference between individual life insurance in Ireland and group life insurance lies in the fact that while the former essentially means that the concerned insured has his or her contract, the latter enjoins the insured to be part of a group contract.

Generally speaking, most of the time employees are of the view that group insurance is a relatively inexpensive option to buy life insurance. However, it is important to recognize that in most cases group plans might end up costing the employees more than individual ones.

It may be unanimously accepted that as far as individual life insurance is concerned, it naturally provides a policyholder with coverage that is superior and longer lasting. Additionally, one of the most evident benefits of individual plans is that one can easily qualify for preferred rates.

The option of preferred rates is not available with most group plans. Consequently, group plans might translate into colossal cost savings in the future. However, there are two sides to the picture.

What is Group Life Insurance?

To comprehend the tenets of group life insurance, one may consider the following elementary points:

  • At its simplest, a group plan, as the name suggests, is one that provides coverage for every member of a particular group. Dependants, wherever applicable, are also provided with coverage.
  • Generally speaking, as far as employer group plans are concerned, the amount of coverage is calculated as a multiple of the member’s salary.
  • One of the common features of a group plan is the optional coverage. An optional coverage can be procured for both the concerned member and his or her family members.
  • Apart from the optional coverage furnished by a majority of group plans, there is the additional association group plan. In this, the coverage amount is generally construed as a basic amount.
  • One of the fundamental features of a group plan is that it is generally available without medical evidence. Also, the prospective policyholder usually need not furnish any other proof of fundamental insurability to buy a group plan.
  • However, it is important to note that redundant or additional coverage is subject to pre-prescribed requisites. Unlike individual life insurance, a policyholder cannot name a beneficiary in a group plan.
  • As far as the premium prospects of a group plan are concerned, the amount of premium is generally charged based on the average age and sex of every member of the group.
  • It is important to underscore the fact that as far as group insurance plans are concerned, the group premium rates are essentially not personalized according to the age, sex, and health of every individual member.
  • To return to the basic aspect of the premium calculation, the premium rate is specifically applied to the amount of coverage as applicable to every member of the group.

Fundamentals of a Group Life Insurance Plan

Generally speaking, there are certain fundamental aspects in which a group plan differs from an individual life insurance plan. They generally include the following:

  • In a group plan, every member is a part of the plan and there is fundamental individualization of the policy.
  • The premiums under a group policy are always subject to alterations if the concerned company decides to raise the premiums of a particular group.
  • The group contact may be liable to cancellation by the concerned issuer.
  • One of the most important points to note is that the coverage will be terminated if a particular individual leaves the group or the job.

Demerits of Group Life Insurance

Generally speaking, group insurance policies are still popular in certain quarters because group plans are generally propitious for those who may find it strenuous to afford an individual life plan. It is a fact that most of the time people are not able to afford a life insurance policy and hence end up taking a group plan.

Apart from that, there is also the added benefit of a group insurance plan in that it generally allows higher-risk individuals to be given life insurance coverage. However, the demerits far outweigh the benefits of group plans.

  • In a group plan, a particular individual or member has almost no real control over the group plan.
  • One of the biggest demerits of group insurance is the fact that the coverage is immediately withdrawn upon a member leaving the group or quitting the job.
  • One of the rather evident anomalies of a group life insurance plan is that relatively healthier members end up shelling out the same amount of premiums as those who are considered to be the higher-risk ones.
  • It may be that certain coverage is not included in a particular group plan. In such a case, most of the time people need to buy additional coverage to compensate for the coverage not included in the corpus of the group insurance plan.

The aforementioned demerits, generally speaking, should naturally prevent people from ending up buying a group insurance plan. However, group insurance is naturally relevant in many quarters of the business world and equally popular across a majority of corporate outlets.

What is Individual Life Insurance?

It may be unanimously agreed upon that individual life insurance is by far one of the best choices when it comes to buying insurance. Relatively speaking, an individual life insurance plan is far better, and in many important ways, than a group plan.

Most of the time insurance experts or client managers will naturally recommend individual insurance and not group plans. The benefits of an individual life plan far outweigh the benefits of a group plan. However, before buying an individual life plan, one should always make it a point to consider both the merits and demerits of it.

An individual life insurance plan is generally more expensive than group life insurance. Logically speaking, the risk is naturally concentrated in a single individual. Consequently, the policyholder cannot generally take any advantage of the savings that come when the proportions of risk are segmented across the members of the group.

Benefits of Individual Life Insurance

Generally speaking, individual life insurance is especially propitious in that it allows tax-preferred savings and estate planning. Apart from that the following are some of the elementary benefits of individual life insurance plans:

  • An individual plan is especially helpful for those who seek relatively higher limits of insurance compared to the ones furnished by group plans.
  • Secondly, one of the most evident benefits of an individual life insurance policy is the fact that it helps a particular policyholder leave a legacy for his or her grandchildren, institutions, or any kind of charity work that he or she has been supporting.
  • Most of the time it may happen that for reasons such as health, one cannot hope to qualify for a group plan. In such a case, an individual plan is the recommended go-to.
  • For people who need a permanent death benefit to safeguard certain needs of their loved ones or even for estate planning, individual plans are of essential significance. Finding attorneys specializing in estate law is one of many ways that an individual could safeguard the needs of their loved ones after their death. Depending on the circumstances of your health or your suspected health in the future you may also want to talk to your children and family about any power of attorney options should the policyholder become ill to the point that decision-making may become impaired.
  • One of the most significant merits of an individual life plan is that it has a death benefit for the concerned beneficiary. As far as the death benefit is concerned, it is primarily meant to ease the onus on survivors who need to tackle the financial strain that comes with the decease of a loved one.

Also read: When Is The Right Time to Buy a Health Insurance Policy

Types of Individual Life Insurance

Broadly speaking, there are two types of individual life insurance: term insurance and permanent life insurance.

1. Term Insurance

As far as individual term insurance is concerned, it is meant to last only for a certain period. Usually, term policies last somewhere between five years and thirty years. Additionally, it is important to note that term policies pay only if the concerned policyholder dies before the end of the term.

What is most important to keep in mind is that term policies are especially helpful in that they are one of the most cost-effective ways to make sure that the loved ones of the concerned policyholder have enough to meet their specific financial ends. It is equally significant to underscore that as far as premiums are concerned, they are much lesser in a term plan than in a permanent one.

It inevitably follows that in a term life insurance plan the concerned policyholder can hope to afford a higher amount of coverage compared to in a permanent life plan.

2. Permanent Insurance Plan

Unlike a term plan, a permanent plan is one in which the concerned insured is essentially covered for his or her entire life, as the name itself suggests. Generally speaking, a permanent plan is primarily used for tax and important legacy planning as well as for funding trusts for certain specific goals.

Most of the time a permanent plan has a savings option to facilitate the insured to accumulate cash value on primarily a tax-deferred basis. Naturally, in a permanent plan, the amount of premiums offered is certainly higher than in an individual plan.

Also, it is important to note that there are three kinds of permanent insurance:

  • Whole Life Insurance: A whole life insurance has level premiums.
  • Universal Life Insurance: Universal life insurance usually combines permanent coverage and tax-deferred cash values with tractable premiums and appropriate payment schedules.
  • Survivorship Life Insurance: At its most elementary, a survivorship life insurance covers two people and pays upon the decease of the second person.

Individual life insurance, broadly speaking, is certainly one of the more popular ones. In fact, in a majority of insurance outlets people look forward to buying an individual life plan. Moreover, across major organizational and management spheres, individual plans are more relevant and more recognized than group plans.

At the same time, one should not assume that group plans are apparently on the brink of extinction, so to speak. The point is to consider one’s preferences while choosing a plan.

Individual Life Insurance vs Group Life Insurance

The main key point difference between the two are as follows:

Characteristic Individual Life Insurance Group Life Insurance
Cost More expensive Less expensive
Flexibility More customization options (coverage amount, duration, etc.) Less flexible, often with standard coverage and terms
Portability Can keep coverage when changing jobs Typically lost when leaving an employer
Underwriting Requires medical exam and health history No medical exam needed
Sum Assured Usually, higher amounts are available Often lower, standard amounts


To continue in the same line, subjective preferences must be balanced with the schemes being procured. For that, it is important to thoroughly consider both sides and then analyze one’s needs and limitations. You’ll need to do thorough research on websites like financegab.com, to find out which insurance policy will be best for you and your needs. Don’t rush into anything!

In simpler words, individual life insurance should certainly not be the choice for those who are on the back foot, financially speaking. In fact, in such cases, it is generally recommended to buy a group plan in which the risk factors, especially, get duly proportioned among the members of the group.

Additionally, group plans, in cases where anything otherwise is impossible, provide an immediate sense of security. Although not meant for long-term goals, a group plan is especially suitable for urgent situations and can provide an immediate firewall against malformed currents.

On the other hand, if a person is financially stable and well-heeled his or her choice should naturally be the individual life plan. What is more, an individual life plan is especially beneficial so far as the family aspects are concerned. Also, there is a considerable level of independence when it comes to an individual life plan.

For instance, the expanse of the coverage solely counts on the decisions of the concerned insured. However, it is equally true that in an individual life plan, one needs to plan a more cautious tread and be more vigilant about the respective undercurrents. Especially when it comes to tweaking certain limbs in an individual plan, the concerned insured must be wise enough to unsettle the status quo, when needed.

Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.


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