Difference Between Group Term and Voluntary Term Life Insurance

September 20, 2022
By Life & General

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Understanding the various kinds of life insurance can be very difficult and confusing. Especially, if you are thinking about buying life insurance, you might be confused about which insurance to buy and how will it best benefit the people around you.

So, here we present a guide to you on life insurance.

Voluntary Life Insurance Policy Vs. Group Life Insurance

When you want to cover a large group of individuals, such as an entire family, with one policy, group term life insurance might be an excellent choice.

However, a Voluntary life insurance policy might be something that employers provide their workers as a sort of financial protection that pays death benefits to a beneficiary if the insured passes away. In exchange for the insurer’s promise to make payments upon the death of the insured, the employee pays a monthly life insurance premium.

Difference between Voluntary And Group Life Insurance

Here is the difference between a voluntary life insurance policy and group life insurance based on various factors:

Area of consideration	Voluntary Life Insurance	Group Term Life Insurance
Types	Voluntary whole life insurance & Voluntary term life insurance	Group Term Life Insurnace
Coverage	Covers only employees	Not restricted to employees but covers groups too
Eligibility	All employees of a company	Bank, NGO, Microfinance, non-banking institutions
Premium	Low premium	Premium lower compared to other policies
Customization	Offers customisation	offers extension along the lines of accidental death, and education payment, thus helping cover multiple benefits along with the existing cover
Benefits	Available digitally. Offer higher non-medical rates. Accidental Death Rider, Accidental Death, Dismemberment Rider Critical illness rider, Terminal illness rider, Total and permanent disability rider	There is no need for a physical or another type of checkup. Get the tax advantages offered by this term of life insurance for premiums paid in accordance with the applicable income tax legislation.

Voluntary Life Insurance Vs Group Life Insurance FAQS

Q1. What Are The Disadvantages Of Group Term Insurance?

Here are the disadvantages of Group Term Insurance.

Fear of Discontinuation

If you are laid off by your employer or decide to quit the company, you will no longer be covered by the Group Health Policy.

Employer-dependent Cover

Your employer gets to choose the health insurance company, determine the coverage, and select other features and benefits of the health plan for you.

Lack of Control

The plan cannot be customised to fit your needs and wants. Your employer gets to select what is best for you.

Inadequate Coverage

The coverage might not always cover the needs of the patient and the employee might have to shell money from his pocket.

No Tax Benefit

As you are not paying the premium to purchase the health policy, you cannot avail of tax benefits under section 80D of the Income Tax Act.

Q2. What Should I Choose Voluntary Life Insurance Or Group Life Insurance?

Depending on the need and the kind of institution you come from, and comparing the benefits that each of these policies offers, you can decide which policy suits your needs better.

Q3. Does Group Term Life Insurance Have A Cash Value?

The bad news is that there is no monetary value in term life insurance. You won’t be paid when your coverage expires. Positively, it is less expensive than long-term coverage. Even though term insurance doesn’t have a monetary value, you can still come out ahead financially because of the premium savings.

Q4. Can I Avail Loan Against My Individual Term Life Insurance Plan?

An advantageous substitute for taking out a personal loan is to borrow money against your base insurance policy.

Nowadays, one of the most popular methods to cover all of your emergency expenditures is to take out a loan against your life insurance policy. It is a simple solution with a number of benefits over other conventional loan forms.

Q5. What Happens After The Policy Period Of My Term Insurance Runs Out?

Depending on the terms and circumstances of the particular policy, the Sum Assured may or may not be paid in the event of death after the policy’s expiration date. If the insurer’s requirements permit, you can renew your existing term insurance policy or purchase a new one. The new premium, however, will be based on your age and health at the time of renewal.

Summary

Though both the forms of life insurance are majorly managed by employers it depends on the company what sort of benefits to offer their employees and to ensure employee satisfaction. Hence it is important to take an expert guide to find the best plan that fits both pockets and well as employees’ expectations.