Life insurance as an employee benefit is no longer just a “nice to have.” It’s a practical way to support employees’ financial security while strengthening your overall benefits offering.
With so many life insurance options available, employees are often left feeling overwhelmed when navigating decisions on their own. Employer-sponsored plans typically provide term coverage as a baseline benefit, while individual policies may offer permanent options designed to address longer-term needs. Employer-sponsored life insurance helps reduce confusion by giving employees a clear, accessible starting point through a trusted source, while still allowing room for broader planning as their needs evolve.
When designed well, group and voluntary life insurance can play a meaningful role in your employees’ financial planning.
What Are the Benefits of Offering Group & Voluntary Life Insurance?
Lower employer costs
Combining group and voluntary life insurance gives an extra “perk” to employees without placing the full financial burden on the employer. Group insurance premiums are usually paid by the employer, while voluntary insurance premiums are paid by the employee.
Access to flexible coverage options
Employer-sponsored life insurance allows employees to build coverage that fits their needs. Group life insurance provides a reliable foundation of employer-paid coverage, typically a flat amount or a multiple of salary. Employees can then purchase additional voluntary coverage at a group rate, which is often cheaper than in the individual marketplace.
Peace of mind and stronger retention
Life insurance provides financial confidence and stability for employees and their families. When employees feel secure, they are more likely to stay engaged and committed. Connecting financial and family security to employment increases job satisfaction for both employees and employers.
What Is the Difference Between Group Life & Voluntary Life Insurance?
Group Life Insurance
Group Life insurance is an employer-offered benefit that provides low-cost or free coverage to its employees. A group-rated life insurance policy doesn’t have the same underwriting requirements as an individual policy, and it often doesn’t require a medical exam. Employees are guaranteed an employer-paid benefit, along with the opportunity to supplement with employee-paid benefits.
Voluntary Life Insurance
Voluntary Life Insurance is an additional benefit that an employee can purchase in addition to the standard group life policy. The policy also includes a guaranteed issue amount during an employee’s initial eligibility period. This means the employee can buy life insurance up to the predetermined guaranteed-issue amount without any medical underwriting. Only if the employee elects an amount over the guaranteed issue will they be required to submit an Evidence of Insurability (EOI) questionnaire before they are approved for the additional amount.
The EOIs consist of general health history, past treatments and diagnoses. They rely on employee-provided information to determine insurability. Unlike individual life insurance, group plans will not typically require medical exams, blood work or urinalysis. This is a major advantage of purchasing life insurance through a group plan, especially if the employee is in a health-related position that might preclude them from receiving a favorable rating with an individual life insurance policy.
It can also allow the employee to purchase voluntary life insurance for their spouse and children, which can be a huge advantage for people in unique health circumstances.
How Life Insurance Works for Employees
Historically, life insurance advisors have used the 10x annual income rule to determine how much life insurance an individual needs. To do this, take the annual income and multiply it by 10 or 12. This will tell you how much life insurance is needed. While this rule still holds true to a certain extent, that number can be hard to reach depending on how much an individual is making. This is why an individual must use every available avenue to help them get there.
For example, say an employee makes $150,000 annually, their life insurance need is around $1.65 million. They can apply for a $1 million individual policy, receive 2x salary ($300,000) from their employer, and then buy $350,000 in voluntary life insurance to fill in the gap. This allows the employee to spread the cost and maximize their purchasing power.
How Much Does Group Life Insurance Cost?
Group life insurance rates are determined by multiple factors, including age, gender, salary and employer industry.
Typically, employer-paid life insurance has a single rate for the entire group, while voluntary life insurance is typically offered at age rates. Employees can choose how much coverage they want for themselves, their spouse and their children. Coverage can be purchased in $5,000 or $10,000 increments up to the predetermined maximum.
If you are using an online enrollment platform like Employee Navigator, the per-pay cost for each scenario is clearly displayed, making it easy for employees to understand their coverage and deductions.
How to Secure a Group Life Insurance Policy
We understand that selecting the right life insurance program can feel confusing. The goal is to make it easier for your employees to understand their options and build coverage that works for them.
Our experienced advisors are here to help you navigate both group and individual life insurance options with confidence.
When you’re ready, we’re here to help you take the next step.
About the Author
In his role at HWP, Marty Bonifant acts as an employee benefits advisor focusing on helping employers of all sizes and industries implement and enhance their benefits programs. He also is well versed in Individual Life insurance and Disability products.
Bonifant holds a Business Marketing & Management Degree from Fairmont State University. He is also a Registered Employee Benefits Consultant (REBC) and is currently working to attain his Chartered Life Underwriter (CLU) designation from the American College of Financial Services.
Email: mbonifant@hwphillips.com
Phone: 202-351-0269
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