Voluntary life insurance

Voluntary life insurance is optional term or permanent insurance coverage offered by employers in addition to a subsidized group life policy.

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Amanda Shih

Amanda Shih

Licensed Insurance Expert

Amanda Shih is an insurance editor and licensed Life, Health, and Disability agent at Policygenius in New York City. Her work has appeared in Slate, Lifehacker, Jetty, and J.D. Power.

Published May 12, 2021|3 min read

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Many employers offer subsidized life insurance, known as group life insurance, to employees as an optional workplace benefit. Group coverage costs little to nothing for employees, but coverage limits of $50,000 or one to two times your salary apply.

Voluntary life insurance, also known as supplemental life insurance, is an employee benefit that allows you to buy more group life insurance for an added premium. Voluntary insurance comes with restrictions, so it’s best for people who have had difficulty qualifying for an individual life insurance policy.

Key Takeaways

  • Voluntary coverage is optional life insurance offered by employers in addition to base group life insurance

  • No health information is required until you hit a set coverage limit, after which you may need to take a medical exam or answer health questions

  • You usually can’t keep your policy if you change employers

  • If you qualify, it’s best to buy your own term life insurance to supplement group coverage

What is voluntary life insurance?

Voluntary life insurance is a type of employer-sponsored group life insurance that allows you to buy additional coverage to supplement your base group insurance plan. Like your group plan, you name your beneficiaries and they get a payout if you die while the policy is active.

Employees can buy or change their voluntary life insurance when they’re hired, during annual open enrollment, or due to a qualifying life event, such as:

  • Birth or adoption of a child

  • Coverage loss

  • Death in the family

  • Divorce

  • Marriage

Most employers do not cover premiums for voluntary life insurance even if they pay your group insurance premiums, and premiums are deducted from your pay.

Policies are usually guaranteed issue, meaning you won’t be denied for health reasons, but only up to a certain coverage amount. Your employer’s benefits administrator can answer any questions you have about how voluntary insurance plans work at your company.

What are the different types of voluntary life insurance?

Voluntary life insurance is typically term life insurance, though some companies may offer a permanent life insurance option. 

  • Voluntary term life insurance provides coverage for a set period, often 10-30 years. It’s less likely that you’ll be able to port your policy if you leave your employer. 

  • Voluntary permanent life insurance protection lasts for life and comes with a cash value component that gains interest over time. These are more likely to be portable if you change jobs, but premiums can be 10 times higher than term life. 

Depending on the insurance company that administers your voluntary plan, you may be able to add riders to customize your voluntary coverage.

→ Learn more about the different types of life insurance

Who should get voluntary life insurance?

Most people should buy private life insurance instead of voluntary life insurance to supplement their group policy. Unless you have medical conditions or risky hobbies that make it difficult to get life insurance independently, a private plan usually offers more coverage and can’t be canceled when you change jobs.

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Term life insurance vs. voluntary life insurance

If your group insurance is covered by your employer, it makes sense to opt in. But, Policygenius advisors recommend buying life insurance coverage equal to at least 10-15 times your salary, more than a basic group life insurance policy provides. If you have children or a spouse, you may need even more insurance to cover your financial obligations. 

Voluntary life insurance differs from term life insurance in a few key areas:

  • Death benefit: The maximum death benefit on voluntary life insurance is often less than 10-15 times your salary. Private term life insurance death benefits have much higher limits, so you can get the full amount of protection you need.

  • Health questions: Every term life insurer will review your medical records before you’re approved for a policy, even if you choose an accelerated underwriting plan. Voluntary insurance only requires some health information for coverage above a certain threshold. 

  • Portability: As long as you pay your premiums, term life insurance stays with you until it expires, you die, or you cancel the policy. Voluntary coverage is usually forfeited—or made portable at a much higher premium—if you leave your employer.

If you want maximum flexibility to get all of the financial protection your family needs, an individual life insurance policy is the best option. 

Voluntary life insurance vs. AD&D insurance

Your employer may offer both voluntary life insurance and accidental death and dismemberment (AD&D) insurance. AD&D only pays a small benefit to your loved ones in cases of death or injury incurred during an accident. Any kind of life insurance, including voluntary, pays for most causes of death but won’t pay a benefit if you’re injured in an accident. 

If you want financial protection from accidental injury and death, you should own both life and AD&D insurance. Like group life insurance, a group AD&D policy may be cheaper, but won’t stay with you if you leave your job.

How much does voluntary life insurance cost?

The cost of voluntary life insurance varies based on:

  • How much coverage you want

  • Your age

  • Whether your employer subsidizes any premiums

Insurance companies usually categorize employees and assign group insurance premiums by age. The older you are, the higher your rates will be. Your benefits administrator should be able to help you calculate your premiums.

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For most life insurance shoppers, the best way to secure financial protection for your family when you die is to buy a private term life insurance policy. Voluntary policies offer some guaranteed coverage, but death benefit and portability limits keep most people from getting all the coverage they need.

If you’re having difficulty finding a traditional life insurance policy, an independent insurance agent can help you choose the best policy.

Voluntary life insurance FAQ:

How does voluntary life insurance work?

Voluntary life insurance allows you to buy additional group insurance coverage through your employer. Coverage is guaranteed issue up to a certain amount and pays out if you die while the policy is active.

Do you need voluntary life insurance?

If you don’t qualify for term life insurance, voluntary coverage is worth considering. Most people will get the most flexibility and protection from a private term policy.

How much voluntary life insurance do you need?

At least 10-15x your income and enough to cover your financial obligations. This amount may be greater than the maximum coverage your employer offers.

What’s the difference between voluntary life insurance and AD&D?

Accidental death and dismemberment insurance pays out to beneficiaries if you’re injured or die in an accident and supplements voluntary or private life insurance, which pays out for most causes of death.