When Dwight Hill was starting a family a couple of years ago, he bought life insurance that was offered through his company. Then he lost his job, and with it the insurance policy.

When he landed a position as a manager at Deloitte, he declined his new employer’s offer of a group policy. Instead, he bought an individual policy in the private market and has his premiums locked in for 20 years, regardless of whether he changes jobs again.

“In today’s economy, with all the uncertainty, we wanted to have the stability of that insurance plan,” said Hill, 37, who has a wife, Sharon, and a 2-year-old daughter, Johanna. “We do pay more, but we feel that those costs are offset by the comfort that we know we’ll have this for 20 years.”

As layoffs continue to plague the economy, many consumers are opting for the safety that an individual life insurance policy can offer. They don’t want to be in a situation where they might lose their job, their policy and their insurability all at once — because of a health condition they may have developed in the interim.

Nationwide, the number of individual policies is growing much faster than group policies. The number of individual life policies rose from 166.1 million in 2001 to 190.2 million in 2002, according to the American Council of Life Insurers’ fact book for 2003. Meanwhile, group policies held by employees or association members grew only marginally, from 163.1 million in 2001 to 163.8 million in 2002.

Good time to buy

But whether you choose an individual policy or a group policy, now is a good time to buy life insurance. Rates have dropped because of the increase in life expectancy. But as with any financial decision, everyone’s situation is different, and you have a lot of questions to answer.

First, you must decide whether you really need life insurance.

Considerations include your life stage, dependents, extent of income that you want to replace, and whether your spouse works.

Typically, life insurance is needed to replace the income that would be lost because of the untimely death of an earning member of a family. It helps to pay off mortgages or meet obligations such as a child’s education.

If you decide you need life insurance, the next big decision is whether you want a group policy, such as one offered through your employer, or an individual policy.

Group advantages

The advantage with group insurance is that it doesn’t require any medical tests. This is particularly suitable for older consumers who have serious health conditions.

“In a group situation, they’ll take anyone that’s employed — the healthy, the unhealthy and the marginally healthy,” Woods said.

The other advantage is that group coverage for people who are not healthy might cost less than what they can find individually. Also, since the billing is done for an entire group, discounts apply.

But check whether the policy has a portability clause that allows you to take your policy with you if you leave your employer. Some policies have clauses that let you convert a group policy into an individual policy. But it will be more costly than the group coverage because it is billed separately.

Individual incentives

Individual policies overcome shortcomings in a group policy.

“If you’re reasonably healthy, you can pay 20 percent to 50 percent less than the group cost. Plus you can lock in the rates for a longer period of time,” said Alan Goldfarb, a certified financial planner and director of financial strategies at Weaver and Tidwell Financial Advisors Ltd. in Dallas.

Also, with individual policies, you can choose between a term policy and a permanent life policy. Group policies, on the other hand, are always term policies.

Permanent policies, also known as cash-value policies, offer a combination of insurance and investment. But they are costlier and more complex.

Yet another advantage with individual policies is that they come on your terms. You decide the company you want to go with and whom to buy it from.

But you have to go through the medical underwriting process, with blood tests and urinalysis. And if you are a smoker or have a history of high blood pressure or diabetes, your rates can be high.

As always, check the ratings of the company before you choose. Look at ratings from A.M. Best Co. or Weiss Ratings Inc.