Though the coronavirus pandemic might not have got you ‘panic buying’ life insurance like millions of people in the US, it might still have caused you to consider taking out a policy on your life.
Many might think of life insurance as something to think about when they are older, and, indeed, those aged 45 to 54 are the age group most likely to take out a policy. However, anyone can enjoy the benefits that come with life insurance at any age.
The benefits that come along with your life insurance depend greatly on what policy you choose. For this reason, it is important to make sure that you select the best policy for you. Not only can these plans vary from company to company, but they can also be either group or individual life insurance policies.
Therefore, when you are looking to take out a new life insurance policy, don’t feel intimidated by the number of different options out there. Here is how you might decide between group or individual life insurance, and make sure you get the best policy for you.
What is individual life insurance, and why might it suit me?
An individual life insurance policy is a plan which covers only you, the policyholder, and sometimes your spouse or any dependents. As the name suggests, an individual life insurance policy is taken out by the individual themselves directly from the insurer.
In the event of your death, the insurer will pay a lump sum to your beneficiaries, which is the core purpose of a life insurance policy. However, some individual policies may have some exclusions for claiming against the policy, such as taking ones’ own life, only being able to claim after a certain period, and they are not always set up in a trust.
What is group life insurance, and why might it suit me?
When it comes to group life insurance, the employer is the policyholder. In other words, the employer is the person who undertakes all the formalities, and purchases and maintains the policy.
This then insures every employee under one single insurance plan whilst they are in this employment, or until retirement. Some group life insurance policies might also protect employees post retirement too, but this depends on the chosen plan.
Group life insurance is most commonly provided as part of an employee benefit scheme, providing a lump sum benefit to an employee’s family in the unfortunate event of their death. This makes sure that the family is financially secure even when their loved one has passed, as the amount granted is often directly linked to the salary earned in life.
This type of life insurance covers you with no medical questions, and your employer as the policy holder is the one that must front the premium. In addition to this, group life insurance is always set up in a trust, which means it is exempt from inheritance tax due to not being part of your estate.
Now that you know the differences between group and individual life insurance, you can be rest assured that you will be able to make the right decision and choose the best policy for you.