Working for large corporations has its own set of advantages. You receive competitive pay, attractive incentives, ESOP benefits, and, most importantly, insurance coverage. Companies purchase an employment protection plan that covers medical cases and unfortunate events such as death or disability. Employees' coverage levels are determined by their income and position in the organisational hierarchy. But is an employer term plan sufficient? Or do you need a personal term plan? Let's find out.
Term insurance is the purest form of life insurance offering financial security to your loved ones in the event of death as well as an accident or illness causing disability during the policy period. The premium is determined based on age, lifestyle, income, and medical conditions.
Term plan is available for a period ranging from five to thirty years. Decide on tenure depending on your current financial obligations and future responsibilities.
Before deciding whether a term plan is required in addition to group insurance, it is critical to understand the distinction between the two.
Individual term cover
Term plans provide flexibility. You are free to select the sum assured based on your needs.
Group term insurance covers every employee of the organisation. It provides little or no flexibility in terms of adding riders # or increasing the sum assured.
A term plan premium will be lesser if you purchase a term plan at a young age, such as right after starting your career.
The premium for a group term plan is affordable from the employer's perspective. Whereas; pay nothing to receive coverage benefits.
You can customise your policy by adding riders # like critical illness coverage.
You cannot customise group term insurance.
Your income, lifestyle, medical history, and age all factor into the premium.
The group insurance premium depends on your position in the organisational hierarchy and monthly income.
Cancellation of the policy
Your term plan will only be cancelled if you do not renew your insurance before it expires.
Your employer may terminate your group insurance coverage for various reasons.
The simple answer is yes. Group insurance may appear inexpensive, but it is insufficient to meet your needs. Here are the reasons to buy a term plan.
There is no definitive answer to this. The amount of coverage varies depending on the individual. As previously stated, ten to twenty times your annual income is sufficient in most cases. But, once again, it entirely depends upon your responsibility.
Assume your annual income is ₹5 Lakh, and you recently received a ₹40 Lakh home loan. You also have a daughter who intends to study abroad before getting married. Given the education fees abroad, the total cost would be between ₹40,00,000 to ₹50,00,000 (including accommodation and flight charges). The wedding expenses would be comparable. In this case, twenty times your annual income may be insufficient to cover your liabilities.
A group term insurance is ideal if you are young and have no responsibilities. However, a term plan is an answer if you are married, have children, and have retired parents. Following your death, it provides complete financial security to your loved ones. Group insurance covers you only while you are an employee of the company.
L&C/Advt/2023/Jan/0023