How Does Underwriting Differ Between Group Life And Individual Life Insurance?

Life insurance policies can be broadly categorized into two types: Individual Life Insurance and Group Life Insurance policies. While both types of policies provide financial protection to the insured person’s dependents in the event of his or her untimely death, there are several differences between the two when it comes to underwriting.

Underwriting Differences Between Individual and Group Life Insurance

The following table outlines the key differences between underwriting for Individual Life Insurance and Group Life Insurance policies:

Factors Individual life insurance Group life insurance policies
Premiums and coverage Individual policies are more expensive as they are customised to suit the individual’s specific needs. Premiums are based on the individual’s age, health, and lifestyle habits. Group policies are cheaper as they cover a large number of people at once. Premiums are usually fixed and not based on the individual’s age, health, or lifestyle habits.
Flexibility Individual policies offer greater flexibility. Policyholders can customise the policy to suit their needs and preferences. They can choose the sum assured, premium payment frequency, and policy duration. Group policies offer limited flexibility as the policy is chosen and paid for by the employer. Employees may have limited options when it comes to choosing the sum assured and policy duration.
Portability Individual policies are portable. Policyholders can continue the policy even if they change jobs or employers. They can also transfer the policy to someone else or surrender it for cash value. Group policies are not portable. If employees leave their job or switch employers, they may lose the life insurance coverage provided by the group policy.
Underwriting Individual policies require underwriting. Policyholders must undergo a medical examination and disclose their medical history. Premiums are based on their health and medical history. Group policies do not require underwriting as coverage is provided to all employees without considering their health or medical history.
Sum assured Individual policies usually have higher sums assured as they are customised to suit the individual’s specific needs. Group policies provide a fixed sum assured to all employees, which may not be sufficient for some individuals based on their specific needs and financial situation.
Tax benefits Under Section 80C of the Income Tax Act, Individual policies provide tax benefits. Premiums paid for the policy are deductible from taxable income, subject to a maximum limit of Rs. 1.5 lakh under the old tax regime. Tax benefits for Group policies are limited to the actual premium paid by the employer, and employees may not be able to claim the benefits themselves.
Premium payment Individual policies require regular premium payments to keep the policy in force. Premium payment frequency can be monthly, quarterly, half-yearly, or yearly, depending on the policyholder’s preference. Group policies are paid for by the employer, and premium payment frequency is usually annual. Employees do not have to make any premium payments for the coverage provided by the group policy.

Factors to Consider Before Choosing a Life Insurance Policy

Before buying life insurance, there are several factors to consider that can help you make an informed decision:

  • Your financial goals: Determine the life insurance coverage amount based on your financial goals. If you have dependents, ensure that the policy provides enough coverage to meet their needs in case of an unforeseen event.
  • Your age: Your age plays a critical role in determining the premium you will pay. The younger you are, the lower the premium will be.
  • Your health: Your health is a key factor in determining the premium you will pay. If you have pre-existing medical conditions, you may need to pay a higher premium.
  • The type of policy: There are different types of life insurance policies available, each with its own benefits and drawbacks.
  • The insurance company’s reputation: Choose a reputable insurance company with a strong financial rating and a good track record of paying claims.
  • The policy terms and conditions: Read the terms and conditions carefully to understand the coverage, premium payments, and any exclusions before signing up for a policy.


Choosing between Individual Life Insurance and Group Life Insurance policies depends on your individual needs and circumstances. If you are looking for a policy that is customised to suit your specific needs and provides a higher level of coverage, then Individual Life Insurance may be a better option. However, if you are looking for an affordable policy that provides basic coverage and is paid for by your employer, then Group Life Insurance may be a better option. It is also possible to have both types of policies, but ensure that the total coverage does not exceed your actual insurance needs to avoid higher premiums.

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