What is voluntary life insurance?
Voluntary life insurance is an employer-based program that offers employees savings on life insurance rates. Quotes for voluntary life insurance are underwritten by your insurer as a whole workforce, saving the employees more on average. Rates for voluntary life insurance can even be 10% to 20% cheaper, depending on where you get your policy and risk factors.
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Written by
Chelsey Tucker
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Reviewed by
Daniel Walker
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UPDATED: Dec 19, 2021
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- Voluntary life insurance is an employer-based program
- They provide savings based on underwriting the entire workforce
- Because of this, the policy may be best for high-risk individuals
Voluntary life insurance is a program where employers opt-in to a life insurance policy for its’ employees. Through this program, individuals are often underwritten as a group, providing savings on premiums to those who would pay more for traditional whole life insurance.
If you’re looking for rates for voluntary life insurance, enter your ZIP code into our free quote tool to see what you could pay.
Table of Contents
What is voluntary life insurance?
Voluntary life insurance is an employer-sponsored program that pays out a death benefit if the insured were to die while the policy is in force.
Employer-based insurance programs can typically be cheaper than traditional life insurance because the insurer underwrites the company as a whole. This can come in handy for people who work in professions viewed as more dangerous by insurers.
Some of the occupations that may benefit most from a voluntary life insurance policy include:
- Commercial fishers
- Logging workers
- Roofers
- Pilots
Jobs with a higher mortality rate will often find it harder to buy affordable life insurance. So, the above occupations’ best bet to save might be through an employer-sponsored plan.
Plus, as the name implies, enrolling in the program is entirely optional. Some workplaces can even take the premiums out of your check each month, so you don’t have to worry about late payments.
What are the top companies that offer voluntary life insurance?
Many insurers are still willing to offer voluntary life insurance for your company. Some of the top life insurance companies include:
- Prudential
- Guardian
- Liberty Mutual
- MassMutual
If you plan to offer your employees an insurance plan through your business, any of the above companies would be a good place to start.
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Is voluntary life insurance worth it?
Not only will voluntary life insurance help protect against any accidents in the workplace, but it also undercuts traditional life insurance rates by evaluating your employer as a whole. Because of this, voluntary life insurance becomes instantly more valuable to a wide range of people.
Even if you don’t work in a hazardous environment, voluntary life insurance can help you get around other factors that might raise your insurance rates, including:
- Old age
- Medical conditions
- Poor credit history
If the entire group of employees is underwritten as a whole and paid into the policy, then the insurer won’t lose nearly as much money when one person passes away. For example, a voluntary life insurance policy can lower the average premium by anywhere from 10% to 20%.
Are there other options for voluntary life insurance?
As with most life insurance products, there are further options that your employer can opt into. Some of these choices will impact your coverage amount, premiums, and the length of your policy.
If you’re unsure, consider discussing your options with an insurance agent.
What are voluntary term and permanent life insurance?
As with all life insurance policies, you’ll be the one who decides the length of your policy, as long as your employer offers both options.
A voluntary term policy would be an insurance policy that only lasts for a short period in your life, such as starting a family or business. Then, you can use the death benefit from that policy to take care of any needs that come up.
On the other side, a voluntary permanent insurance policy would last from the day you pay your first premium until you pass. As long as you pay for the costs, you can expect your insurer to pay out a death benefit when you pass away.
What is voluntary life insurance and AD&D?
According to Vanderbilt University, accidental death and dismemberment is an insurance policy taken out by an insurer if someone dies or is severely injured at work. If this happens, the insurer pays out an agreed-upon amount to that person or their family.
Some sites state that if you already have a voluntary life insurance program, you may not need a voluntary accidental death & dismemberment plan as well. However, it may benefit an insurer to give the employee the most choices available.
What are the benefits of voluntary life insurance vs. term life insurance?
Traditional term life insurance and voluntary life insurance share many similarities. If you have the option of getting one or the other, you can rest a little easier knowing that both policy types offer:
- A death benefit that pays to your beneficiary when you die
- Level premiums for the length of your policy
- The ability to cancel at any time
It’s important with any new life insurance policy that you’re aware of how much you’ll be paying vs. what you’ll get from it. Many insurance companies, be they voluntary or private, will be happy to help you get a quality policy over one that you’d have to cancel later.
How does term life insurance differ from voluntary?
While they share some similarities, there are just as many differences between voluntary and traditional term life insurance. For instance, the level of risk posed to the policy is based on the workplace as a whole, which could cause you to pay more if you’re in a lower risk category.
Some of the other differences found between a voluntary and traditional life insurance policy include:
- Rates based on the entire employee base
- An employer can opt-out of specific coverage
- You can lose coverage if you leave that workplace
Some insurance programs through employers may have an option to let you keep coverage, but there is no guarantee. However, when you enroll with a health program through your insurer, you can save at the cost of giving up some choice about your insurance.
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Voluntary Life Insurance: The Bottom Line
Many life insurance companies offer voluntary life insurance, and employers are more than happy to provide that coverage if it’s needed. While not everyone will decide to opt-in for coverage, voluntary life insurance is an excellent way to save on life insurance premiums.
If you’re looking for quotes for voluntary life insurance, enter your ZIP code into our free quote tool to see what you could pay.