Individual Life Insurance vs. Group Life Insurance
|Individual Life Insurance||Group Life Insurance|
|You have your own contract.||You are part of a group contract.|
|You have a premium rate that is guaranteed in advance, the company cannot decide to change it.||The group policy premiums can be changed & may increase if the company decides to raise premiums for the group. This will depend on the claims experience in the group.|
|The insurance company cannot cancel your insurance, only you can.||The group contract can be cancelled by the issuing life company.|
|Your individual policy is fully portable. It is not connected to the group. If you change jobs or are no longer a member of the group, you will not lose the coverage.||The coverage will terminate if you leave your job or if you leave the group.|
Many employees are offered group Insurance plans through their employer as it provides them with basic benefits that are partially paid for by their employer. There are a lot of advantages to group health insurance, and one of the biggest ones is the overall cost savings. This can provide the employee and their dependents with affordable Insurance coverage.
In employer group plans, the amount of basic Life Insurance coverage is usually computed as a multiple of the member’s salary, such as one or two times annual salary. In association group plans, coverage is generally a flat basic amount. Optional coverage can usually be obtained on both the plan member and his or her dependent family members.
Basic group life/health insurance coverage is available without a medical examination or other evidence of insurability from the group members or the dependents of the group members. Additional coverage is subject to underwriting requirements. As with personal life Insurance, the plan member has the right to name a beneficiary for the coverage.
The premium charged for each group member is based on the average age and sex of all members of the group. This premium rate is then applied to the amount of coverage applicable to each individual group member. Unlike individual insurance plans, group premium rates are not personalized according to the age, sex, and health of each individual plan member.
What do Group Plans usually offer?Individual Disability Insurance explained
Many employer Group Plans may offer minimal amounts of: Employee Life Insurance (usually 1-2 times your annual salary), Accidental Death & Dismemberment, Healthcare (includes prescription drugs, paramedical expenses, Vision care, Dental care, Long Term Disability with 120-day waiting period up to a max of 66.7% of monthly earnings to a max of $5,000 or 85% of you pre-disability take-home pay, whichever is less. You can refer to your Benefits booklet provided to you by your administrator or check your benefits online.
When do my group benefits end?
Under most group insurance contracts, group benefits coverage ends on the last day worked.
The statutory notice period sets out the minimum amount of notice of termination that an employer must provide to an employee. This period is prescribed by federal, provincial and territorial employment standards legislation.
An employer may ask that the employee to work until the end of the statutory notice period, or instead, terminate employment immediately and provide the employee with pay in lieu of working notice. Where an employee receives pay in lieu of working notice, the employee’s benefit coverage still ends on the last day worked, unless the employer is required by statute to continue coverage during the statutory notice period. In that case, most insurers will extend coverage to the end of the statutory notice period.
Purchasing individual Coverage
Purchasing your own individual coverage will provide you with guaranteed coverage that you will maintain for as long as possible, without having to worry about your employment or the terms of the group benefits with your employer. You can choose to purchase individual term or permanent Life Insurance coverage, Disability Insurance with a benefit period till age 65 or longer (Based on annual income), Critical Illness Insurance that pays a lump-sum and covers you for 25+ Illnesses, Health & Dental Insurance & more. Most Group plans through an employer do not offer Critical Illness coverage. This increases your risk financially and may end up eroding your retirement savings should you not have any Critical Illness coverage in place. Most disability plans in a group have a 120-day waiting period and a benefit period up to 2 years only. The definition of ‘Total-disability’ in a group plan may also make it difficult to receive benefits in a group plan, depending on your profession and the terms set in the group plan. The definition of ‘total disability’ will differ in an individual plan.
Definition of ‘Total Disability’ in an individual plan
Total disabled or total disability in most individual plans means that: Due directly to an injury or illness, you are unable to perform the important duties of your regular occupation; and you are not engaged in any other gainful occupation and are under a physician’s care. You will also be entitled to partial and recurrent disability.