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Life Insurance During Open Enrollment

A guide on buying life insurance during open enrollment through your employer and it’s comparison to supplemental individual life insurance.

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Life Insurance Through Your Employer

Many employers offer fringe benefits to their employees as perks to recruit, motivate, and retain high-quality people. Common fringe benefits include health insurance, tuition assistance, employee discounts, stock options, and the one we’re focusing on in this guide: life insurance.

There are two types of life insurance through your job: group life insurance and voluntary life insurance.

When you are first hired, there is typically a probationary period until you’re eligible for benefits. This period can vary but 90 days is common. After this time is up, employees are enrolled in the company’s group life insurance plan unless they choose to opt out.

After the probationary period you are also eligible to purchase extra coverage on top of your group coverage. This extra coverage is referred to as voluntary life insurance plans.
When is open enrollment?
Open enrollment is the annual period when employees can make changes to their benefit plans. Employees can enroll in plans, switch to new ones, or opt out of plans during this time period.

The open enrollment period generally runs from November 1 to December 15 every year, although your state’s specific time frame may be slightly different.

If this period of time passes you need to wait until the next open enrollment period to make changes unless you have a qualifying life event (QLE).

According to Healthcare.gov, there are four basic types of QLE:

Loss of health coverage

  • Losing existing health coverage, including job-based, individual, and student plans
  • Losing eligibility for Medicare, Medicaid, or CHIP
  • Turning 26 and losing coverage through a parent’s plan

Changes in household

  • Getting married or divorced
  • Having a baby or adopting a child
  • Death in the family

Changes in residence

  • Moving to a different ZIP code or county
  • A student moving to or from the place they attend school
  • A seasonal worker moving to or from the place they both live and work
  • Moving to or from a shelter or other transitional housing

Other qualifying events

  • Changes in your income that affect the coverage you qualify for
  • Gaining membership in a federally recognized tribe or status as an Alaska Native Claims Settlement Act (ANCSA) Corporation shareholder
  • Becoming a U.S. citizen
  • Leaving incarceration (jail or prison)
  • AmeriCorps members starting or ending their service

During open enrollment or a qualifying life event, you can opt in to voluntary life insurance plans offered through your employer or adjust your coverage if you are already enrolled.

What is group life insurance?

Group life insurance is a type of life insurance in which a single contract covers an entire group of people. Your employer owns this policy.

The cost of group life insurance is fairly inexpensive for employees, if not free. Many employers choose to pay these premiums on behalf of their employees as part of the benefit.

Group life insurance usually provides coverage for one or two times your salary up to a certain maximum, often $50,000. If your employer offers group life insurance for free or at a minimum, take advantage of this. Group life insurance has no medical requirements and you’re guaranteed coverage.

The group life insurance coverage alone is often not enough coverage if you have a family relying on you. You have the option of buying additional coverage on top of your group life insurance policy—and we recommend this.

This additional coverage can be in the form of voluntary life insurance, which is offered through the same insurance company as the group coverage, or you can buy your own individual life insurance policy through any insurance company you’d like.

Not sure how much term life insurance you need?

What is voluntary life insurance?

Some employers also offer additional coverage on top of the group life insurance amount that you can purchase. This additional coverage is a separate plan referred to as voluntary life insurance.

These voluntary group life insurance plans are simple to purchase. You can often buy up to a certain amount (for example up to three times your salary) without providing evidence of insurability.

What is evidence of insurability?
Evidence of insurability is documented proof to the insurance company that you’re in relatively good health. This proof can be in the form of a medical questionnaire, health records, a medical exam, or all of the above.

Through this same plan, you probably have the option to buy even larger amounts of coverage, but you will have to provide evidence of insurability.

With the voluntary coverage, you need to re-enroll each year and the insurance company re-evaluates your premiums at this time based on your age. These group voluntary life insurance premiums typically increase in five-year increments.

Because of these price increases, if you’re in relatively good health, it’s often much more cost-effective to buy a separate individually-owned term life insurance policy to cover any needs above your group life insurance.

Want to see what you’d pay for life insurance?

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What is an individually-owned term life insurance policy?

An individually-owned life insurance policy means you own the policy outright. It’s completely separate from your employer so it goes with you wherever you go.

If your employer cancels your group coverage benefits, your individually-owned life insurance policy is not affected. If you leave your job voluntarily or are terminated, your individually-owned life insurance policy is not affected.

With this term life insurance coverage, you choose the coverage amount and how long the coverage lasts. Term lengths range from 10 to 40 years depending on your age.

You do not need to renew year after year as you would with voluntary life insurance coverage. As long as you pay the premiums, the coverage continues until your chosen term length expires.

An individually-owned term life insurance policy is the best type of life insurance for most individuals looking to supplement their group life insurance coverage.

If you’re relatively healthy, a term life insurance policy will often be more affordable over the course of the policy than a voluntary life insurance policy.

Why? Term life insurance is individually underwritten to you, the insured, whereas voluntary life insurance pricing is based on averages in a group.

With coverage offered through your employer, if you’re healthier than the average group of individuals, you may end up paying more than you would with an individually-owned term life insurance policy.

On top of this, term life insurance premiums are fixed. This means when you buy the policy, your premium won’t increase the entirety of the term. Your age and health won’t affect your premiums. Voluntary life insurance premiums are not fixed. They will increase as you age.

Consider the table below for a better idea of the cost of term life insurance versus voluntary life insurance.

Scenario: $100,000 Coverage for 30 Years for a 35-Year-Old Non-Smoking Male
Ages Cost of Group Universal Life Insurance Coverage Cost of Term Life Insurance Coverage
Risk Class: Preferred Plus
Cost of Term Life Insurance Coverage
Risk Class: Standard
35-39 $540 $815 $1,280
40-44 $756 $815 $1,280
45-49 $1,188 $815 $1,280
50-54 $2,160 $815 $1,280
55-59 $3,510 $815 $1,280
60-64 $5,292 $815 $1,280
Total overall cost after 30 years: $13,446 $4,890 $7,680

The premiums shown are for a voluntary group universal life insurance policy. Group voluntary universal life insurance policies often have an option for you to participate in accumulating cash value, but this is an additional cost and is not reflected in the premiums above.
Since term life insurance is individually underwritten, there are pricing examples for both very healthy individuals (Preferred Plus) and slightly below average (Standard). Although your premiums are paid on a monthly basis, the table below breaks up the premium costs into five-year totals for perspective.

What happens when my group life insurance premiums increase?

Typically, the premiums of a voluntary life insurance policy you purchase through your employer (the coverage in addition to the group coverage) increase every five years based on your age. Once you hit your 40s, they significantly increase.

When employees realize their premiums are about to seriously jump, many start looking for other options. An individually-owned term life insurance policy is often the solution. While premiums for voluntary life insurance are quite high, term life insurance can still be very affordable in your 40s.

The table below compares the overall cost of voluntary life insurance to buying a term life insurance policy at age 45.

You can apply for term life insurance and get your final price before officially accepting the policy. We recommend you do this a few months prior to open enrollment so you can weigh the pros and cons of going with the supplemental voluntary life insurance or an individually-owned term life insurance policy.

With an individually-owned term life insurance policy, you will be medically underwritten. If you have a serious medical condition, you may be uninsurable or your premiums may be extremely high.

If this is the case, it’s recommended you buy as much voluntary life insurance as you can during open enrollment.

Scenario: $100,000 Coverage for 20 Years for a 45-Year-Old Non-Smoking Male
Ages Cost of Group Universal Life Insurance Coverage Cost of Term Life Insurance Coverage
Risk Class: Preferred Plus
Cost of Term Life Insurance Coverage
Risk Class: Standard
45-49 $1,188 $941 $1507
50-54 $2,160 $941 $1507
55-59 $3,510 $941 $1507
60-64 $5,292 $941 $1507
Total overall cost after 20 years: $13,446 $3,764 $6,028

Questions? Talk with our experienced advisors.

Benefits of Buying Life Insurance During Open Enrollment

If your employer pays for your group life insurance, take advantage of this. This is a great fringe benefit.

If your employer offers supplemental voluntary life insurance coverage you can buy, this may be very beneficial if you have health issues. You can buy a good amount of voluntary life insurance (typically up to three times your salary) without needing to provide any health information to the insurance company.

If you have tried to purchase individually-owned life insurance in the past and have been declined or couldn’t afford the premiums offered, buying employer-sponsored life insurance during open enrollment is your chance to secure that financial protection for your loved ones.

If you’re wondering whether you should buy or renew your voluntary group life insurance plan or buy an individually-owned life insurance policy, a cost comparison for your unique situation is needed.

Premiums for an individual policy are based on each person’s gender, health, height, weight, smoking status, state you live in, family history, etc. You cannot just point to a rate chart for premiums and assume that will be your cost.

Quotacy’s life insurance quoting tool allows you to enter the information that pertains to your situation and view the estimated cost of term life insurance.

To see life insurance quotes, you do not need to provide your name or contact information, so no one will be calling you to try to sell anything to you. Take your time educating yourself on life insurance and determining how much coverage you want to purchase.

Type of Life Insurance Pros Cons
Group Life Insurance Policy
  • Often no cost to employee or at least very minimal cost
  • Employee doesn’t need to provide any evidence of insurability – coverage is guaranteed
  • Small coverage amount
  • Can only enroll during certain times
  • You lose coverage if your employer cancels your group life insurance benefits or if you leave your job
  • Coverage usually ends at a certain age (typically 70 to 75)
Voluntary Life Insurance Policy
  • Can buy up to certain amount without providing evidence of insurability – coverage is guaranteed
  • Option to purchase higher amounts of coverage with evidence of insurability
  • May be able to be converted to another policy if your employer cancels your group life insurance benefits or if you leave your job
  • Often have the option to have policy premiums paid with automatic paycheck deductions (post-tax dollars)
  • Can only enroll during certain times
  • Premiums are fixed and increases as you age
  • No choice in type of life insurance (i.e. term, whole, or universal life insurance)
  • You lose coverage if your employer cancels your group life insurance benefits or if you leave your job
  • If convertible to new policy, continuation isn’t automatic and rates likely increase with new policy
  • Coverage usually ends at a certain age (typically 70 to 75)
Individual Term Life Insurance Policy
  • Not limited to an enrollment period – can buy whenever
  • Individually-owned so it can’t be canceled if employer drops coverage or you leave your job
  • Typically more affordable over the life of the policy compared to voluntary life insurance
  • Fixed premiums – won’t go up with age or medical issues
  • Can purchase as much coverage as you need up to your maximum insurability limit (a very large amount most people won’t hit)
  • Usually convertible to a permanent policy if your coverage needs change
  • Need to provide evidence of insurability, which may include a medical exam
  • Coverage is not guaranteed

Here’s a helpful overview of the life insurance buying process.

Orange compare quote icon.
Step 1: Compare Quotes
Enter basic information, choose coverage, and answer short health questions to compare prices from top carriers.
Orange apply online icon.
Step 2: Apply Online
Enter additional health/lifestyle information. We’ll then check to make sure you’re getting the best deal.
Orange confirm information icon.
Step 3: Confirm Information
Either through a phone interview or online, you’ll verify your information and answer any follow up questions.
Orange medical exam icon.
Step 4: Medical Exam (if needed)
It’s FREE, only takes 10-15 minutes, and the exam team will come to you. Just pick a convenient time and date.
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Step 5: Review and Activate
If approved, and you’re happy with the official offer, sign and make the first payment to activate your coverage.

Ready to get started?

Take our life insurance quoting tool below for a test drive.

Helpful Advice During Open Enrollment

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Do I Need Individual Life Insurance if I Have Group Life Insurance?

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Premiums for My Group Life Insurance Are Increasing—What Now?

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Getting the Most Out of Open Enrollment

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