Group Life Insurance vs. Individual Life Insurance: What’s the Difference? 

Introduction

Whether to obtain a home loan in the UAE or gain the ability to face hazards caused by accidental death, disability or injury, life insurance is a priority for all. Especially for employers, it is a sole responsibility to secure every worker’s life as they are precious assets to the company. It may help employees or their families to pay living expenses, outstanding debt amount, and upcoming financial requirements.

However, in this context, employers often get confused between two mostly available insurance options. One is individual life insurance plans and the other one is group life insurance. Both have certain features that provide security to employees’ lives. But, which one is the right insurance plan to ensure employee satisfaction and company growth at once? That’s a prevailing doubt.

So, this blog is here to discuss the necessary details that can help make an informed decision in this matter

Individual Life Insurance and Group Life Insurance: What are they?

Among diverse life insurance options in the UAE, individual life insurance is a plan that covers the needs of a single individual. The policyholder can choose the coverage amount and time duration according to their financial plans. If the policyholder is an employer, they can consider their company budget, terms and conditions along with the employee benefit packages while selecting the policy coverage and duration for individual life insurance plans.

On the contrary, a group life insurance plan keeps more than one individual under security coverage. It is beneficial for SMEs and other organisations who do not have enough systems or funds to provide individual coverage to each worker. To know more about how group life insurance works, have a look at this blog.

How Group Life Insurance Plan Differs from Other Individual Insurance Plans

• Coverage type: Group insurance covers a group of people, like employees in an organisation, under a single contract, ensuring certain medical facilities for them. On the other hand, individual life insurance takes care of an individual’s particular needs.

• Customisation options: Group life insurance does not offer enough customisation as it includes general facilities for all group members. Individual policies are customisable, enabling insurance holders to add or remove facilities.

• Underwriting procedure: A minimal underwriting process is required when applying for group life insurance policies. But, for individual life insurance, it is a more detailed process, including the health examinations.

• Coverage limit and premium cost: The coverage limit for group life insurance plans is lower than for individual insurance plans. Due to this factor, the premium cost is also lower for the first one than the latter.

• Claim process: For group life insurance policies, the employer initiates and continues the claim process, on behalf of the employee families, if any mishap occurs. On the other hand, in the case of individual life insurance plans provided by the company, employees or their families need to contact the policyholder employer to start the claim process.

• Cancellation: Insurance companies cannot cancel the insurance plan in cases of individual life insurance, while group life insurance can be canceled by the insurance provider if required.

• Terms of Continuation: The individual insurance policy may continue after an employee’s retirement if the insurance premium is paid continuously. On the contrary, the coverage benefits of a group life insurance for an employee may be dismissed if they leave the job or lose it.

Individual Life Insurance or Group Life Insurance: Which One Should You Choose?

While planning life insurance coverages, a policyholder must make sure that the plan secures beneficiaries’ interests well. If it is a small or medium employer-employee group or non-employer and employee group with limited funds, group insurance policies are good options. It covers medical expenses due to workers’ illnesses, disabilities, injuries due to workplace accidents at a lower premium cost. Thus, the company’s budget and reliability are both ensured.

On the other hand, individual life insurance covers the particular interests of an employee and it can be continued even when that employee does not work under the company. In this way, it broadly covers an individual employee’s needs giving them a comprehensive experience of employee facilities.

Final Thoughts

In the long run, it is evident that individual life insurance is expensive, and it becomes a little complex to manage when being obtained for company employees. On the other hand, group life insurance is a cost-effective and less complex way to secure employees’ lives. So, when it comes to choosing an insurance plan, you should look at the requirements.

If the policyholder wants a comprehensive insurance plan that is not limited to employment tenure, individual life insurance is the best option. Otherwise, if the requirement is for a budget-friendly and easy-to-manage insurance plan, group life insurance is ideal for that scenario.

When it comes to choosing life insurance packages for workers in an organisation, an employer can select the insurance type according to the employee count, company size and life insurance funds.

Connect with experts at CoverB today for tailored insurance service for all your needs!