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Individual Life Insurance vs. Group Term Life Insurance

Individual life insurance covers only you until retirement. Group life insurance is provided by employer and is valid only till the time you are employed. Click here to learn more in detail.

  • 7,622 Views | Updated on: Feb 26, 2024

Securing the financial future of your loved ones in case of your absence or sudden loss of income is achieved with a life insurance policy. However, life insurance may seem confusing with the different types of plans that are offered by multiple insurers.

You may choose between an individual plan, term insurance, money back policy, group insurance, and many more. A common decision that you may find hard to make is choosing between group insurance and an individual plan.

Before you decide between individual life insurance vs. group term life insurance, understanding both these types of policies will be beneficial.

Individual life insurance plans

An individual life policy covers only you and may continue until your retirement, or even later in some cases. When you first avail the insurance policy, the insurer will levy a certain premium based on some factors. These include your age, profession, health conditions, sum assured, and several others. For traditional individual insurance plans, the premium remains constant during the entire duration of the policy. This means even if you have to pay a slightly higher premium, the coverage does not decrease as you grow older. Therefore, it is recommended that you buy an individual plan at an early age, which significantly reduces the premium you pay for a higher coverage. Moreover, the risk of not being eligible for a policy when you are older is higher, which is why it is better to purchase insurance at an early age.

Group term life insurance plans

A group plan is offered by the employers as an additional perquisite to their employees. Unlike an individual plan, a group term plan is owned by your employer. However, you must remember that coverage under a group plan is available only if you are eligible. However, such insurance coverage is available only as long as you are employed. Moreover, the group insurance plan may be canceled at any time by either your employer or the insurance company.

The premium on a group plan may often be lower than an individual policy. However, in most cases, the premium increases when you attain a certain age, which is typically every five years. This means that the premium you pay for the group coverage increases, as you grow older.

Let us now understand the differences between an individual life insurance vs. group term life insurance policy.


When you buy a traditional individual life insurance policy, the premium remains constant during the entire duration. On the other hand, the premium on a group plan may increase proportionately as you grow older.


The amount of coverage under a group plan is limited as per the terms and conditions as determined by your employer. However, there is no limitation on the amount of life coverage that you may avail of under an individual plan. In most cases, coverage under a group plan is not sufficient to cover an extreme condition. Such a limitation is not applicable when you opt for an individual plan.


As long as you make the timely payment of the renewal premium on your individual policy, the coverage continues. In comparison, coverage under a group insurance ceases when you quit your job or lose your job. Some group policies offer a portability option, but there may be several restrictions and exclusions and you may also have to pay a higher premium for such portability.


An individual life plan cannot be canceled by the insurance company. The only way coverage will become unavailable if you do not pay the premium in a timely manner. On the other hand, a group plan may be canceled by either your employer or the issuing insurance company. Therefore, there is a higher uncertainty of coverage under a group plan.

Life insurance is a powerful method to financially secure your loved ones. It is difficult to make a choice between individual life insurance vs. group term life insurance. It is recommended that even if you are covered under a group plan, you must enhance the coverage with an individual policy.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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