Top Voluntary Life Insurance: What You Need to Know [2023]

What is voluntary life insurance? In short, a voluntary life insurance policy is when your employer opts into coverage for its employees. You choose whether or not you would like to enroll, hence the name. That being said, you can’t sign up anytime. You may need to wait for open enrollment.

Now that you know what voluntary life insurance is, enter your ZIP code into our free quote tool to see what you could pay today.

What is voluntary life insurance?

When it comes to voluntary life insurance vs. basic life insurance, it all depends on where you’re purchasing your insurance. Voluntary life insurance is a policy that your employer offers. Because you can choose whether or not to opt-in to the coverage, it’s voluntary.

Voluntary life insurance is also known as group life insurance because the insurance company will underwrite the entire workforce as a whole. This allows the insurance company to provide everyone in the company with lower rates.

Who needs voluntary life insurance?

Your employer’s voluntary life insurance can be a great way to save on your monthly rates. When you apply for a life insurance policy, your insurer will evaluate the risk you pose to them paying out. The higher chance that you might die during the length of the policy, means the more you pay.

The life insurance underwriting process can be fairly extensive as it will consider various factors in your life. Some of the areas that life insurance underwriters consider are:

• Demographics such as your age and gender
• Your current health
• Any criminal record
• Family medical history
• Your occupation and hobbies
• Tobacco use

This is why applying for a basic life insurance policy by yourself can lend itself to higher costs if you have a few red flags. For instance, according to the University of New Hampshire, smokers can pay up to $1,000 more per year for life insurance.

Applying for a voluntary life insurance policy will likely save you money since the insurer will underwrite the entire workforce as a whole. In addition, this means that you’ll probably have to pay less for insurance because the insurance company is taking on less risk.

What is voluntary life insurance and AD&D?

Voluntary life insurance traditionally comes in either term or whole life. However, your employer can opt to include accidental death and dismemberment coverage. This AD&D coverage can provide you with an extra death benefit if you die or are severely injured at work.

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Is voluntary life insurance worth it?

Whether or not voluntary life insurance is worth it will depend on your individual life. If you’re someone who is considered a higher risk, you should consider the cost of a basic life insurance policy against what your employer offers.

Those who have multiple red flags on their record will find that they’ll have to pay quite a bit for coverage. Whereas at an employer, a high-risk individual would be able to save.

The average monthly cost of a life insurance policy is $40 to $55, although it can be higher depending on the level of coverage the applicant wants.

Can I keep my voluntary life insurance if I leave my job?

The one downside of voluntary life insurance is that your coverage will last only for as long as you have that job. If you leave that employer for any reason, you won’t be able to keep your group life insurance policy with that employer.

Because the life insurance company is underwriting your employee base as a whole, it makes sense your policy wouldn’t follow you. Since you are no longer a part of the whole workforce for that employer, the insurer will strongly prefer to underwrite you as an individual.

Some options before and after you leave your voluntary life insurance policy include:

• Signing up for an individual policy
• Going to a new employer that offers group life insurance
• Transfer your current plan to a new employer

If you need to leave a workplace, you should feel free to do so. However, having a life insurance policy as a benefit should be a consideration.

Are there different types of voluntary life insurance?

When it comes to voluntary life insurance, you may want to consider multiple types of policies. As with regular life insurance, your choices will depend on the type of insurance is offered.

The two most popular types of voluntary life insurance include:

• Voluntary term life – Term life is usually referred to as the most straightforward life insurance coverage due to its simple process. If you die during the set term of the policy, the insurer will pay out.
• Voluntary whole life – Whole life insurance will last for your entire life as long as you pay the premiums, but it is more expensive. Some whole life policies also accrue additional cash value from your rates.

Deciding on which policy is right for you requires you to examine your life and what you think will benefit you and your beneficiaries.

If you’re only worried about the short-term future, you can get a term life insurance policy that only lasts for a a set time. But, on the other hand, you may find that you’ll benefit most from a long-term approach that pays out no matter when you die.

How do I apply for voluntary life insurance?

If you want to apply for a voluntary life insurance policy, check your employer’s benefits plan to find out if your employer offers a life insurance program. Then check if there is an open enrollment period.

You may able to apply for the voluntary life insurance program when you first start working at the company, but there might be a delay. If you miss that window, you may have to wait a few months for the next open-enrollment period.

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Voluntary Life Insurance: The Bottom Line

Since you know what voluntary life insurance is, you can begin looking for an employer that offers coverage. You should be aware of the cost compared to individual life insurance. Also, you may have to wait until the open enrollment period to sign up for a voluntary life insurance policy.

Now that you know what voluntary life insurance is, enter your ZIP code into our free quote tool to see what you could pay for a policy today.

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