Why do I need to buy an individual term plan when my employer already covers it?

Yes, absolutely. A group term insurance plan is, no doubt, an excellent employee benefit. 

But you’ll still need an individual term plan.

Here’s why: 
 

• One of the biggest drawbacks of group term plans is that the life cover will never be enough to meet your family’s financial needs
   

• Additionally, your individual term plan is customised to your needs and covers you during the entire pre-decided policy duration. But your employer term plan offers limited customization and you will lose the policy benefits when you quit this job.

Your employer's group term plan may not be enough to meet your family's financial needs.

This may put your family in a financial crisis in case of your unexpected demise.


But that’s not the only problem with group term plans: 

• Your employer can discontinue or change the cover of the plan any time they want

• If you quit or take a sabbatical/gap year, the plan will get automatically discontinued and you will lose coverage

• You can’t renew or extend a group term plan once you retire (although it depends on the insurer). Getting an individual term policy after your retirement will be very expensive

• Your group term plan may or may not come with add-on benefits like critical illness and other disease coverages. 
   

Hence, it is always recommended to also get an individual term plan to ensure your family is adequately protected in your absence.