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Making a Decision: Individual or Group Life Insurance Policies?

Individual or Group Life Insurance Policies?

These days it seems everyone is planning for their future. From choosing the right career, to when is the right time to have a family, there will be choices that will ultimately reflect things to come. One of these choices is choosing the right life insurance option for you and your family. Many choose to enroll in their employer-sponsored group life insurance, while others feel they need more. Here are the pros and cons of choosing your employer-sponsored life insurance and finding your own coverage.

Employer-Sponsored Coverage

Group Life Insurance Policies
There are many benefits to choosing life insurance offered by your employer, there are also a few cons that cause people to strike out on their own and find their own coverage.

Pros of Group Life Insurance Policies:

• Cost: This is often the number one reason to choose a group life insurance policy. As your employer is given a group rate, the savings are passed on and you pay less (or even nothing)
• Acceptance: With a group policy, the risks are spread over everyone who has opted into the policy. This means you are guaranteed coverage in most cases. If you choose to raise your coverage, you may be asked to undergo a questionnaire or doctor’s exam to determine your ability to be covered, but in many cases this is rare.
• No Increased Rates: One of the benefits of group life insurance is that it is not individually underwritten. This means you can have the worst health at work but still pay the same rate as the healthiest employee in the company.

Even though guaranteed coverage and low rates are good reasons to choose group life insurance, there are also cons that may make you think twice.

Why people opt out of their employers plan and find their own coverage:

• Additional Coverage: With many group policies, there is a cap, a maximum amount of coverage available. For those who want more than the Benefits employers offer, they either find their own policies or find additional coverage in addition to their employers group life insurance policy.
• Coverage Ends When Your Job Does: If you stop working for your employer, you lose your coverage. It doesn’t go with you. Depending on the insurer, you may have the option of continuing coverage at the individual rate, but if cost was the reason for joining the group policy, you will lose that benefit. Also if you lose your job because of an injury or ill health you may be uninsurable at that point.
• No Choices: The insurance company and plan is chosen by your employer and you have no control. If they choose a cheaper, unreliable carrier, then that is what you are stuck with.

Pros and Cons of Individual Coverage:

For many, individual coverage is a better choice for them. However, there are both pros and cons to choosing your own life insurance.

Here are the pros of Individual Life Insurance:

• Amount of Coverage: With individual policies you have control over the amount of coverage you pay for. You can get as much or as little as you need.
• Choice of Provider: Unlike a group policy, you choose the provider that is better for you.
• Portability in Coverage: If you quit or change employees, your life insurance doesn’t stop. You can continue your coverage and it follows you.

Cons of individual Life Insurance:

• Cost: In many cases, individual life insurance is a bit higher depending on the term of the policy. If you shop around you may find rates comparable to group policies.
• Acceptance: As private coverage is underwritten, you will be subject to exams or questions to determine if you are able to be covered. If you are in poor health, you may find it hard to be accepted.
• Expiration Date: If you choose a term life policy, as many do, you will find an expiration date. If the policy expires and you need to renew coverage, you will find it is harder than the first time as you are older and health may have deteriorated.

Choosing the right insurance policies is a part of life that can make or break your future. Having the right life insurance coverage for your family is a responsible choice that shows you care. If your employer offers life insurance, compare their plan to individual coverage plans to determine what is right for you. Often a combination of both individual and group insurance policies is what you need as that will give you the best of both worlds.

 

See Also:

Term or Whole Life Insurance- Whats The Right Option for You?

8 Solid Ways to Insure Your Family for Less

The Life Insurance Safety Net

Mandatory Health Insurance Pros and Cons

Why Do I Need a Long Term Care Insurance Policy?

Save on Automobile Insurance

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About the Author:

Brittany Babb is a guest writer for http://www.secureinsurancequotes.com where you can find out more about the low cost life insurance .

Comments

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