Term Insurance Plan Group or Individual

Written by : Knowledge Centre Team

2025-11-05

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Term life insurance is one of the most effective ways to ensure protection from the financial insecurities that may arise in the future, and also protects your family from various uncertainties. A term insurance plan makes sure that your family is taken care of even after your departure.

Also Read - What is Term Plan?`

The face value of the policy is paid only if the policyholder meets with an unfortunate event during the term of the insurance. This policy is more attractive to people who want the security of knowing that they are protected for life. More often than not, they are willing to pay higher premiums for less coverage to feel secure.

Now, the question is which policy to choose: Group term insurance that is provided by your employer or an individual term life insurance policy that caters to your specific needs?

Let us discuss both types of insurance policies to help you choose the best term plan for you and your family.

Key Takeaways

Group term insurance, usually employer-sponsored, is cost-effective but lacks flexibility, continuity, and portability if you change jobs.
With individual term insurance, you can choose the coverage, riders, policy duration, and even include your spouse.
Individual policies stay with you regardless of your job or employer, ensuring uninterrupted protection as long as you pay the premiums.
Individual term insurance may offer better renewal terms or pricing in claim-free years, while group plans usually do not offer this benefit.
The earlier you buy term insurance, the lower the premium.

What is a Group Term Life Insurance?

When one contract is issued to cover multiple people, it is called a group term life insurance. The group which benefits the most from this type of contract is a company. The contract covers the benefits of the employee and is issued to the employer. Employers usually provide employees with the base amount for group coverage. The employer may also offer the employee the opportunity to purchase supplemental coverage for their family.

As compared to individual term life insurance, group term life insurance is relatively inexpensive, which is why participation is high. Unlike individual term life insurance, group is not considered to be one of the best savings plans, as the contributions made by the employer cannot be redeemed by the employee.

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What is an Individual Term Life Insurance?

Individual Term Life Insurance, often referred to as pure life insurance, is a policy that provides financial protection to your family in the event of your untimely death during a specific policy term. It guarantees a pre-decided death benefit to your nominee if the insured person passes away during the coverage period.

Once the policy term ends, the policyholder typically has the following options:

Renew the policy for another term (often at a revised premium)
Convert the policy into a permanent life insurance plan (if allowed)
Let the policy lapse without renewal or conversion

This type of term insurance covers only one individual, although some policies may allow the addition of a spouse under a joint term plan. It is designed to offer pure protection without any savings or investment component, unlike whole life or endowment policies.

While individual term insurance may not be suitable for wealth creation or savings, it is highly effective for securing your family's financial future by offering high coverage at affordable premiums. The primary objective is to ensure that your loved ones do not face financial difficulties in your absence.

Group Term Insurance vs. Individual Term Insurance: What to Opt for

When it comes to securing your family's future, choosing the right type of term insurance plan is crucial. While both group and individual term insurance serve the purpose of providing financial protection, they differ significantly in terms of coverage, flexibility, and long-term value. Understanding these key differences can help you make an informed decision that aligns with your financial goals and lifestyle needs.

Applicability: In the employer-sponsored group term plans, the continuation of the benefits and the coverage of the plan are dependent on the employer. It is so because the insurance is issued in the name of the employer, and they are responsible for paying the premium. During the stringency of availability of capital, the employer may fail to pay the premium and no longer be able to provide the coverage for the employees.
In case the employee wants to change jobs, they themselves will have to find a new policy or get enrolled in the group insurance of the new company. However, all this hassle can be avoided if one opts for individual term life insurance. The individual term insurance is always available and provides continuous coverage and benefits as long as the premiums are being paid.
No Claim Bonus: When individual term insurance expires, it can be renewed or enhanced (if the eligibility criteria are met). You can avail of the benefits at a lower premium rate. A group insurance plan does not offer such benefits for a claim-free year. Term insurance is often not to be confused with savings plans since there is no payout at the end of the specified period.
Flexibility: The coverage provided by the group term insurance is usually standardised and may not fit the lifestyle of the employee. Group term insurance often does not provide the option to the employee to avail the benefits for their spouse or children.
In the case of an individual term insurance, they can modify the plan as per their requirements. Some of the term plans, like iSelect Smart360 Term Plan by Canara HSBC Life Insurance, allows you to add your spouse to the same policy.
Pricing: In a group policy, the terms and conditions are decided by the employer. The plans offer similar benefits and cover most employees of the company, if not all. A group term insurance is usually inexpensive because the premiums are paid by the employer; the employees may have to contribute a small portion of their paychecks towards the insurance to become eligible for the benefits of the contract. Individual term insurance costs are significantly more than their counterparts.
But along with the extra price comes extra benefits. Unlike the group policy, which offers similar benefits to all employees, the individual policy can be modified and adjusted to suit the needs of the person availing it. Individual term insurance also has added benefits, and in the long run, benefits can be availed at a discounted price as well. This will depend on the terms and conditions of your insurance plan.

Final Thoughts

It is prudent to take up term insurance as early as possible since the premium will increase if it is taken at a later age. In a group insurance policy, this will not be a cause of concern, but it will also not provide the additional benefits of the individual policy. It is also advisable to opt for an insurance scheme that best suits the individual's lifestyle. Some individuals participate in group insurance as well as take up individual term insurance. The person should go above and beyond to see which scheme is the most beneficial to them before finalising on anything.

If you're looking for a reliable plan, the iSelect Smart360 Term Plan by Canara HSBC Life Insurance can be tailored to meet your specific needs. From flexible coverage options to the ability to add your spouse under the same policy, our plans are designed to evolve with your life stages. Start early, choose wisely, and secure your family's future with confidence.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.