Group vs. Individual Insurance

  • 1
  •  
  •  
  •  
  •  
  •  

Many employees are enticed into buying optional group insurance to supplement their individual life insurance coverage. They often are misinformed into thinking that this optional group goverage will give them a lower rate and better value, but, the reality is, in most instance group coverage is actually more expensive than equivalent term life coverage without the added benefits of an individual life policy. Below we’ve outlined the difference between an optional group insurance policy and an individual life insurance plan:

  1. Group life policies generally go up in five-year increments. — Individual life insurance policies are available in 10, 20 or 30-year terms. This allows you to have a longer fixed rate than a group life policy.
  2. Group life policies can be adjusted on a group-wide basis and/or the coverage can be eliminated if the group has had a poor claims experience. — Individual policies are owned by the policyholder and provide a unilateral contract, i.e.the insurance company cannot cancel your coverage and can only adjust your rate as stipulated in the contract. The insured can cancel their coverage anytime. Optional group life coverage has a limited array of products. Individual contracts can be either term insurance or a permanent policy, where the coverage is with you for your lifetime and can generate a cash value.
  3. Optional life plans do not offer preferred rates. — Individual policies offer preferred rates if you are in very good health and have an excellent family health history. The difference between preferred and standard rates can be very significant, especially for term policies.

    A 40-year-old male non-smoker would pay $62.55 a month with Equitable Life for standard rates on a $500,000 Term 20 policy. The plan would cost $44.55 a month if the same applicant qualified for preferred rates.    

        See our full article on Preferred rates right here.

    4. Optional life plans do not offer riders and/or benefits — Individual policies can have a plethora of policy riders and benefits. One example is Manulife’s Children’s Term Rider, which allows the insured to add a rider that grants their children the right to upgrade their own coverage up to 25 times the original face amount without a medical. You can find further details on that plan here

If you have any questions, please don’t hesitate to call us at 1.866.899.4849 and you can get a free, online instant quote at our Term Life Instant Quote Page.

18
Leave a Reply

avatar
  Subscribe  
Notify of
Daniel
Daniel

What would you recommend for an older (50+) individual (non-smoker) for modest sum (around 50,000 – I would like to purchase a small amount of life insurance for myself & possibly wife.

Thanks,
Dan

Lisa P
Lisa P

How is $300,000 Term 5 I want to match it up with what my company is offering. Much apprec.

hmanne
hmanne

I currently have a term policy in place for 250,000 with Sunlife and a combined 100,000 universal life + 100,000 Level term 20 Life Insurance with Industrial Alliance. My husband has a 250,000 Universal Life with Transamerica. Overall, we both have gone past the 2 year contestability period on all our life insurance policies. Recently, an agent from Primerica suggested we switch to a group polic for our family to lower our insurance policy fees (whuch they explained is billed yearly per individual policy). They suggested that my husband be the primary policy owner for 300,000 term 30 and I… Read more »

Reed
Reed

Can I own a group policy even if I have two other policies. Should I cancel my other plans and keep my employer plan its cheaper

Thomas B
Thomas B

Which is more expensive Group or Individual Life Ins. I’m 41 male NS good health. I’m covered with … for $600,000 now

Sean Cooper, Financial Freelance Writer and Blogger
Sean Cooper, Financial Freelance Writer and Blogger

Great article, Chantal! A lot of people make the mistake of assuming group life insurance is superior to individual without looking at the facts. I actually wrote a similar article on individual vs group disability insurance you would find interesting: link to ratesupermarket.ca

Jack Larmond
Jack Larmond

The Biggest area overlooked is the “convertibility option” offered both in individual & Group Benefit Life Insurance policies. What is drastically different is the pricing! This pricing difference is usually not looked at until it is too late. Although group plans initally typically offer much better pricing than do individual plans, the biggest & most important difference to consider is what will happen when that employee leaves his/her employment or retires. Are they able to keep the life insurance plan at the same cost and take it with them? The answer is No! If that employee develops a health issue… Read more »