Group Term Life Insurance vs Voluntary Life Insurance

Side by Side Comparison helps in making an informed decision
Every employer wants their workplace to be safe and healthy for the employees.
Employee’s health and his/her family’s financial problems might become a stress for a company. Nowadays having an employee-specific life insurance policy helps the employees to manage family expenses.

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Voluntary life insurance offers financial protection and provides a cash payout to the nominee/beneficiaries at the time of the policyholder’s death. Group term life insurance policies are term insurance where a single agreement is issued to cover a group of people. 

But before deciding which policy to choose, you should first learn about both their features and benefits. Let’s understand them in detail: 

What is Voluntary Life Insurance?  

Voluntary Life Insurance is an offering that establishes you as a caring employer. This is the optional benefit offered by the employers which require no additional payment. It helps the families of an employee to address their requirements in the times of need. It ensures that employees have the chance to buy the insurance at a group rate. Riders are also available under this insurance. Voluntary Life Insurance provides you an option to customize your group insurance cover and provides financial protection at the time of the accident, critical illness, total and permanent disability, and terminal illness. In basic life insurance, a regular premium is payable by the employee every month. This is more ideal for those who want their families to be secured and protected if you are not around them. 

What is a Group Term Life Insurance? 

In group Term life Insurance, a single policy covers multiple people. It is not restricted to only employees but it also covers other groups like Non-Governmental Organisations (NGOs), customers of the bank, etc. With the help of grouping, many buyers come together and negotiate as one unit, and employers profit more buyer strength and economies. Some schemes of group insurance offer coverages for outstanding loans to a group of debtors, while few come with the diagnosis of a critical illness and disability. 

Difference between Voluntary Life Insurance and Group Term Life Insurance

Voluntary Life Insurance

Group Term Life Insurance

It provides financial protection to the employees 

This Group Term Life Insurance is not limited to employees. It also offers financial help to other groups. 

Who is Eligible? 

All employees of the company with maximum and minimum age 18 years and 65 years respectively. 

Who is Eligible? 

  • Bank’s employees, 
  • NGOs, professional groups
  • microfinance organizations 
  • non-banking financial institutions.

Plans offer lower premium rates 

Its premium is relatively lower than other individual policies. 

Voluntary insurance also provides an option to customize plans. Customization will help employees to make an informed choice that suits their needs

This term insurance provides the coverage extension along with the attachment of add-ons such as accidental death, education payment, thus helps cover multiple of benefits along with the existing cover. 

Benefits of Voluntary Life Insurance 

  1. Digital Mode – Purchasing this insurance now is at your fingertips with a complete digital mode. 
  2. They offer higher non-medical rates 
  3. Availability of Riders – It provides the option to avail riders: 
  • Accidental Death Rider 
  • Accidental Death and Dismemberment Rider 
  • Critical illness rider 
  • Terminal illness rider 
  • Total and permanent disability rider

Benefits offered by Group Term Life Insurance 

  1. No medical examination or check-up is required 
  2. Get the tax benefits under this term life insurance on premiums paid as per prevailing income tax laws

Why Should I choose Group Term Life Insurance? 

This is one of the primary questions that comes to the mind of every customer that why should I go with this plan. What are their benefits? So, Group Term Life Insurance usually offers a lower premium and is quite inexpensive, majorly for younger individuals. But in most cases, the coverage amount is not sufficient or large, so they are required to attach with an individual plan. Employers offering the insurance to their employees sometimes limit their policy coverage based on certain things such as time, salary, dependents, and statuses of employments like whether the employee is full-time or executive. Group plans majorly cover the base salary of an individual. 

Is Voluntary Life Insurance and Basic Life Insurance is same? 

Some dissimilarities exist in both policies. Here is a quick laydown: 

Voluntary Life Insurance

Basic Life Insurance

Voluntary Life Insurance is a part of employment benefit

Basic life insurance is purchased from a private insurer for an individual’s financial protection and security

They are less expensive. 

They offer more customization in their plans as compared to voluntary life insurance. 

They last till the employment of an individual 

Lasts for long term 

It provides a minimum guarantee issue amount and requires no medical check-up 

Guaranteed issue is not available

Is Voluntary Term Insurance is a ‘must have’ policy? 

A Voluntary Life Insurance helps in filling all the gaps present in the plan offered by the employer. It is additional protection or a shield that provides you more safety against life uncertainties, by leveraging the buying power of a group, without paying any additional costs. Thus, it also reduces financial stress and helps to improve their health. Cost-effectiveness is another amazing benefit. Premium rates are relatively lower than other insurance plans and provide unique benefits at no cost to the employer. But 

In Closing!

With each type of life insurance and term insurance, there are various pros and cons associated. Voluntary life insurance and group term life insurance, both offer benefits to employees for their financial stability. But how to select the right plan that suits your needs? One should always be aware of the policy’s features and benefits when deciding to buy insurance and then make an informed decision. it is always advisable to compare premium prices before purchasing any policy as this gives you an idea about choosing the right plan. 

Choose your plans smartly.

Written By: PolicyBazaar

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