Individual vs. Group Life Insurance: Which is Best For You?

individual vs group life insurance which is best for you text overlaying image of a group of people Life insurance is an important way to ensure your families stability if anything should ever happen to you. Oftentimes you will need to go out and get a life insurance policy on your own. But sometimes your employer will provide you with a life insurance plan through their company. This is known as a group life insurance policy. If your employer does offer a group life insurance plan you might be thinking ‘great now my family is covered’. But is it really good enough to have just a group life insurance policy?


It might not cover everything your family needs. Even with this plan you might need to consider also getting an individual life insurance policy. In order to know which plan is best for you, or if you need both you will need to weigh the pros and cons of both types of plans against your lifestyle and needs.

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Group Life Insurance

Most of the time when looking for life insurance, you have to fill out an application. If you’re accepted, you can buy a policy that covers you. Group life insurance is different because it is given to a group, like a company’s employees. With a group policy, employees usually get a base amount of coverage and, in some cases, the chance to add more coverage by taking it out of their paychecks. One important thing to remember is that this kind of group coverage usually only lasts as long as you work for that company. If you leave your job, you might not be able to keep your group life insurance policy. 

Group Life Insurance Pros and Cons

The advantages of group life insurance are that there is no medical underwriting, or very little if any. If your employer has a group policy, you may be able to get insurance without having to answer questions about your health. Or get a physical as your employment makes you eligible. Most of the time, group life insurance is a simple offer that can be accepted without any questions about your eligibility. And more than likely it shouldn’t cost you anything. If a company advertises life insurance as a benefit for employees, they will usually pay for the premiums. 


Now the downside of group life insurance is that there may not be enough protection within the plan options. You also often do not get to pick how much coverage you receive. It is up to the company you work for. The amount of coverage you actually need depends on your life and personal responsibilities. But a good rule of thumb is to think about how many years of your income you’d like your family to have if you died. You will need to compare that to the amount of coverage your group plan has offered. Then decide if you need to get additional coverage or if your group plan is enough.


Also remember after leaving a company, there is a chance you could lose your life insurance policy. Some group policies end when you leave the company, but there are others that are “portable,”. Which means you can turn a group life insurance policy into an individual policy. You will need to look over the details of your plan or speak to an agent to find out the specifics of your life insurance coverage.

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Individual Life Insurance

Life insurance is essentially a contract between an insurance company and you. It says that in exchange for a monthly premium, when you pass away the life insurance company promises to pay a set amount of money to your beneficiary, or beneficiaries. With individual life insurance policies, you purchase them on your own and you can choose either a:


  • Term life insurance policy This is the most common type of life insurance and generally the most affordable. You choose a specific duration of coverage typically between 10-30 years. Your premium will remain the same throughout the entire term. If you pass away during the term your beneficiaries will receive your death benefit tax-free. If you outlive your policy, you may be able to extend coverage in 1-year increments. There are also some types that will let you convert to a permanent life insurance policy.
  • Permanent life insurance policy This type of policy, also known as traditional life insurance, is guaranteed to remain in effect for your entire life, as long as you stay up to date on your premiums. In addition to giving your beneficiaries a death benefit when you pass away these policies also often come with a savings component. Meaning as you pay your premiums you will start to build a cash value that also increases with interest. With enough cash value your policy can actually begin to pay for itself from the savings component.

Within these two types of life insurance are several subtypes. Giving you a large variety of options to find a plan that is perfectly suited to your needs.

Individual Life Insurance Pros and Cons

Even if you have group life insurance, it’s a good idea to learn more about individual term life insurance as well. First you will need to figure out what kind of life insurance you need. Then weigh the pros and cons of each. For pros, when you buy a life insurance policy for yourself, you can take it with you wherever you go. As long as you pay your premiums, your policy is good. It doesn’t rely on you staying at the same job as your group life insurance. Other benefits include:


  • Choosing how much coverage you want and how long the term lasts. Death benefits from term life insurance can range from $50,000 into the millions, with policies lasting anywhere from 1 for 30 years.
  • Younger and healthier enrollees generally have lower premiums, and if you buy a level-premium term life insurance policy your rate will never go up while the policy is in effect. Meaning the younger you are the easier it is to lock in a more affordable rate compared to buying when you’re older.

As for the cons, you have to pay for it out of pocket. The rate you pay will depend on how healthy you are and lifestyle. People who are older, not in great health, and smoke cigarettes are likely to pay more for their insurance compared to a younger, healthier person who doesn’t smoke. 


Additionally, you can be turned down after applying for your policy. During the process of underwriting, insurers do a risk analysis. Which weighs out how risky it is to insure you. Meaning they might not give you a policy if something in your past raises a red flag and makes you too much of a risk. 

Do I Need an Individual Life Insurance Policy If I Already Have A Group Policy?

When deciding on the amount of coverage or how many policies you need, it’s important to consider any dependents you may have. For example, if you are single, healthy, and have no dependents you’re less likely to need extra life insurance. As long as your group policy covers your current debts and any funeral expenses, you should be ok with just a group plan.


On the other hand, if you have a family you need to take them into consideration. Suddenly losing your income due to your death can be a scary situation especially when you are the sole provider of your family. If your family relies on your income and would have trouble paying bills without it, an extra life insurance policy is a smart investment. It helps you ensure that between the death benefits from the group policy and your individual policy all of their needs will be met.


If you do need extra coverage, one thing to look into is whether or not the insurance company your employer has chosen offers extra life insurance. Meaning you can raise your death benefit and pay the difference of raising it. This can be a cheaper way to add coverage to your current policy without having to go through underwriting since you already have the policy through your job.


Another thing to consider is the type of group policy you have. If your employer’s group life insurance is a term policy, you might be better off with an individual whole life policy. This is because you can outlive your term policy and end up having no death benefits when you pass away.

Working With an EZ Agent

It’s important to remember that your needs for life insurance will probably change as time goes on. A few things that can cause a change with your life insurance policy would be aging, number of dependents, health status, and job status. The choices you make about life insurance today aren’t set in stone. You can add or take away policies in the future. Just keep in mind that as you get older, you are more likely to have health problems and have to pay a higher premium.


Everyone has their own needs, priorities, and ways they can spend their money. At EZ.Insure, we know that you want the best coverage for you and your family. But you also have to stick to a budget. That’s why we’re committed to finding you the best policy at the best price, and we want to make it as easy as possible to do so! We’re here to help, and the best part is that everything we do is free. We will help answer all of your questions as well as help you choose a policy and finish the enrollment process. We will also continue to assist you after your plan has started. To get started, just type your zip code into the bar below or give us a call at 877-670-3560.

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About The Author:
Cassandra Love

With over a decade of helpful content experience Cassandra has dedicated her career to making sure people have access to relevant, easy to understand, and valuable information. After realizing a huge knowledge gap Cassandra spent years researching and working with health insurance companies to create accessible guides and articles to walk anyone through every aspect of the insurance process.

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