Group Life Insurance vs. Individual Life Insurance

February 8, 2023   |   Life Insurance

Many companies offer group life insurance to their employees as part of their benefits package. While group life insurance is a valuable part of a protection strategy, it may not be fully covering you like you thought, and, often at a higher cost. 


Group life insurance can be beneficial because it features: 

  • Income tax-free death benefit. 
  • Minimal or no medical underwriting. 
  • The potential to add additional coverage for dependents. 

However, it can be a one-size-fits-all type of policy. Depending on the plan, the amount of coverage may be fixed, you probably can’t choose the insurer and the type of policy is limited. You typically get the same policy as any co-worker in your company. The differences with an individual life insurance policy are that you purchase a policy designed for your needs and budget from a company of your choice. 

While both types of insurance have their benefits, it is also important to understand the differences. Group Coverage can be a great building block and it truly isn’t an either/or scenario, but potentially using both group and individual coverage to fit you and your family’s needs! 


With group life insurance, you don’t “own” your policy. If you were to resign or become terminated from the company, the group life insurance policy may not go with you. Once employment is terminated, typically so is the insurance. 

With an individual life insurance policy, you are the owner. If you transfer jobs or retire, the life insurance can continue as long as the premium is paid. 

Health-based pricing 

One of the best benefits of group life insurance is minimal or no medical underwriting. However, this can be a double-edged sword. If not paid by your employer, you can pay the same premium whether you are in great health, not-so-great health or a smoker.  

Most individual life insurance policies are medically underwritten. If you are in good health and a non-smoker, you will likely have a lower premium than a person who is not in good health and/or who smokes. 

Maximum limit 

Group life insurance often has a low set coverage amount (1-2x your annual salary or less), which may not adequately cover your life insurance needs. Depending on the plan, additional coverage may be available up to set plan limits. 

Most individual life insurance carriers base their maximum coverage limits on a multiple of one’s income. The amount will often exceed what is obtainable through a group plan! 

Guaranteed premiums 

Group life insurance premiums are typically based on company experience, and subject to potential increases (which can be passed on to the group participants). If the insurer raises the group premiums and passes the increase to the employees, the participants in the plan can be impacted. 

Individual life insurance premiums are guaranteed through the length of the term period that you select! 

Review your coverage 

Group life insurance can be beneficial and provides death benefit protection at attractive rates for those who may have health problems. But, understand the limitations of your group insurance plan. 

Request a personalized life insurance quote or learn more here to see how an individual life insurance plan can supplement your group life insurance coverage and provide the amount of coverage you need to help support your family. 

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