Schimri Yoyo is a financial advisor with active life and health insurance licenses in seven states. Born in Haiti. Reared in Brockton, MA. Matured in Philadelphia. Schimri is a proud graduate of Arcadia University, having earned both a Masters in Special Education and an MFA in Creative Writing from the castle-riddled campus in Glenside, PA. By personality and by profession, Schimri is an educator...

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UPDATED: Oct 17, 2020

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Learning what is voluntary life insurance vs. basic life insurance will make things easier when you begin to look for the best quotes.

Here we’ll explain why both voluntary life insurance and basic life insurance don’t normally allow you to get a policy with no medical exam term life insurance. We’ll also discuss some key differences between voluntary and basic life insurance that you should know, like how voluntary life insurance can sometimes include accidental death life insurance riders.

Before you do dive in to learn more about what is voluntary life insurance vs. basic life insurance, use our FREE life insurance quote tool above to instantly compare quotes for basic and voluntary life insurance. Get started now.

Table of Contents

What’s the difference between basic life insurance and voluntary life insurance?

Voluntary life insurance is a low-cost type of term life insurance offered through employers. This differs from employer-paid life insurance policies, which are usually limited to about the same or twice the amount of your base salary.

Basic life insurance is offered to some employees as part of their employment package. This type of insurance is offered at a low cost or free. The life insurance package covers a set amount of coverage. Some companies do offer supplemental coverage to expand your policy.

Voluntary life insurance — also called group life insurance — and basic life insurance is both term policies that are offered through your employer.

Voluntary Life Insurance vs. Basic Life Insurance

Voluntary life insurance is a low-cost type of term life insurance offered through employers.

Insurance experts believe most people need somewhere in the range of five to seven times their yearly income in insurance and sometimes more.

What is basic life insurance? This video explains basic life insurance.

Basic life insurance, also called standard life insurance, refers to regular, individual term policies purchased independently.

Why should I buy voluntary life insurance?

There are benefits to buying voluntary life insurance.

  • This type of life insurance has limited underwriting required. This allows for people with health conditions or lifestyles that might otherwise disqualify them to qualify for life insurance.
  • The rates are lower by 10 to 20 percent, and that makes these life insurance policies affordable for those who might not otherwise purchase them.
  • Many companies also offer the employee the opportunity to purchase a policy for their spouse and children if desired.

Voluntary life insurance is sometimes convertible if employment ends but is often expensive to do. It usually requires underwriting or further proof of insurability.

Why should I buy basic life insurance?

Basic life insurance is offered to employees as part of their employment package. This type of insurance is offered at a low cost or free. The life insurance package covers a set amount of coverage.

Some companies do offer supplemental coverage to expand your policy. When people think of benefits that their companies will offer they usually think of insurance or medical benefits and retirement plans. There are additional benefits that you could be offered, like the HCA’s CorePlus total rewards package. It includes many additional benefits, like adoption assistance.

CorePlus, child, voluntary life — don’t worry. We are still talking about life insurance.

Some basic life insurance policies will have no medical exam insurance plans available.

Medical records will be requested and underwriting will occur. Rates will be higher than fully underwritten policies, and the death benefits are typically lower. Basic life insurance rates are higher than when the same policy is purchased through a group plan, also called a voluntary plan. People must pay for the policy on their own.

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What is the difference between voluntary and supplemental life?

Now let’s talk about the difference between voluntary and supplemental life insurance.

Supplemental life insurance is any kind of group insurance that you decide to purchase on top of the insurance that your employer provides you. This includes riders.

Below are a couple of examples of optional riders that could be applied to your coverage. This information is provided by the State Financial Department of New York.

  • Disability Income – This rider provides a monthly income while you are totally disabled, You will be eligible after an initial waiting period. The monthly disability income benefit is limited to a percentage of the death benefit.
  • Cost of Living Rider – This rider enables you to purchase more insurance each year to help offset increasing insurance needs due to inflation. The amount that can be purchased is based on increases in the cost of living index. This coverage is usually available at low rates.
  • Spouse Rider – A common question about life insurance is, What is spouse life insurance? There technically is not a policy called by this name. This question refers to a policy purchased for your spouse or the purchase of a spouse rider. This rider will provide level term coverage on the insured party’s spouse.
  • Accidental Death Benefit – This benefit provides additional insurance if the death of the insured occurs by accident. These benefits can provide for two or three times the face amount of the policy for specific types of accidents. The accidental death must occur before a specified age. Sickness does not count as accidental.

There is also an accidental death and dismemberment rider, which can get confusing.

You may have been researching and asked yourself, “What is voluntary life insurance and AD&D insurance?” That is simply a voluntary life insurance policy with the additional accidental death and dismemberment rider attached.

The key takeaway when it comes to voluntary life insurance vs AD&D is that AD&D insurance is not in every policy, individual or voluntary. Employee AD&D benefits are additional so remember that you will not likely have this coverage unless you add it. Accidental death and dismemberment insurance will come into effect if the insurance party suffered an unintentional dismemberment or death.

Dismemberment can include losing the function of body parts, like going blind. Accidental death only comes into effect in the event of the loss of life and AD&D insurance is a benefit to consider if you have a high-risk job.

What factors will affect my life insurance rates for voluntary or basic life insurance?

Many factors will affect your life insurance premiums.

The older you get, the higher your life insurance rates will be when you buy a policy. Rates increase with age.

Your life insurance rates will be higher or lower due to gender.

Women have a longer life expectancy than men, so men have higher rates. Some habits are considered high-risk because they increase your mortality rate. These habits include:

  • Smoking or chewing tobacco
  • Reckless driving
  • Excessive drinking
  • Skydiving

Some companies will allow you to have non-smoker rates if you’ve quit and not smoke for a period of their choosing. Reckless driving has a link to higher mortality and serious risk of bodily injury or harm. Life insurance companies will often want to look at your driving record to see if you’re a reckless driver.

High-risk habits such as smoking cigarettes and reckless driving aren’t the only habits the life insurance company will want to know about.

Marijuana and life insurance are correlated; marijuana/cannabis smokers are also at risk of higher rates.

Your current health and medical history are very important to the insurance company. Any condition that could increase your likelihood of death will increase your premiums. These conditions include heart disease, high blood pressure, or even obesity.

How do I get the best rates for voluntary and basic life insurance?

To get the best rates, you need to compare life insurance companies.

When comparing coverage, make sure to look for policies that will cover what you and your family will need. Ask the insurance company what riders they offer and if you need them. Riders are additional coverage options that are added to your policy. They normally aren’t required, so make sure to add any if you think you’ll need them.

Shop around for the best rates.

Ask the life insurance company if they offer discounts or bundles. Not all bundles are cheaper than buying insurance independently, so compare prices with bundles and without to see which makes the most sense fiscally. You become a higher risk as you get older, so you’ll get a better rate if you buy insurance at a younger age.

Life insurance companies will access all your lifestyle and health factors to determine how much of a risk they will have to take to insure you. Any factor that will lower your life expectancy rate or heighten your mortality rate will make you more of a risk to the company. Tips for lowering your life insurance rates are:

  • Get healthy
  • Lose weight
  • Stop smoking
  • Limit high-risk behavior
  • Change occupations if you have a high-risk job

Comparing each life insurance company’s rankings, reputation, rates, and coverage options can be a daunting task. This is why we offer a free life insurance quote tool so you don’t have to do all the work.

How much basic life insurance do I need and what can I do with it?

Most people have no idea how much life insurance to buy. We have a term life insurance calculator to determine how much life insurance coverage you’ll want to purchase.

While learning about life insurance can be time-consuming, there are online resources and books to search for information about voluntary life insurance. Dave Ramsey hosts a radio show and discusses life insurance, for example. This video will give you an idea of reasons why you need life insurance and how much you’ll need.

The main thing to remember when figuring out how much coverage you need to purchase is to get enough coverage to replace your income, and for as many years as you need. If you are a single father with two grown kids and you have no debt, then you probably won’t feel the need for a $300,000 life insurance policy.

If you are a single father with a son who is 3 and a son who is 7, then you’ll probably want to get coverage that’s equal to your salary and enough to provide for your sons until the youngest is 18. When you pass, the money will be paid out to the beneficiary of the policy (voluntary). Dependent life insurance can be additionally bought and it will offer coverage if your spouse or dependent dies.

Say you make $50,000 a year and have no debt. That’s $50,000 multiplied by 15, the number of years until your youngest son will be 18. That’s $750,000 you’d want in coverage.

Benefits of Basic Life Insurance

There are many benefits to having basic life insurance. The life insurance can help pay for:

  • Funeral/Burial expenses
  • Medical bills
  • Debts
  • Supplement income

Money from life insurance can be used on medical bills and debts that accrued. It can provide supplemental income and even future needs that aren’t foreseeable. Basic life insurance can also cover funeral and burial expenses.

Burial & Funeral Expense

In 2016, the median cost of a funeral, along with burial and viewing, was $7,360. The median cost of the funeral, with burial and viewing, and a vault is $8,508. These figures don’t include the cost of monuments, cemetery costs, flowers, obituary, or other miscellaneous costs. Casket prices increased by 230 percent from December 1986 to September 2017.

TransAmerica Average Monthly Burial & Final Expense Rates – $10,000 Coverage
Policyholder Age & Gender Average Monthly
Burial & Final Expense Rates
40-Year-Old Female $20.43
40-Year-Old Male$24.02
45-Year-Old Female $22.65
45-Year-Old Male$27.16
50-Year-Old Female $25.32
50-Year-Old Male$30.73
55-Year-Old Female $29.19
55-Year-Old Male$36.00
60-Year-Old Female $33.72
60-Year-Old Male$43.81
65-Year-Old Female $41.62
65-Year-Old Male$56.53
70-Year-Old Female $53.99
70-Year-Old Male$74.66
75-Year-Old Female $72.89
75-Year-Old Male$100.03
80-Year-Old Female $104.11
80-Year-Old Male$140.22
85-Year-Old Female $148.62
85-Year-Old Male$200.43
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The chart above is an example of burial and funeral expense rates, from TransAmerica, for $10,000 coverage. These rates are for non-smokers.

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How the Coronavirus (COVID-19) Pandemic Affects Basic Life Insurance

Does life insurance cover coronavirus? Since the coronavirus pandemic, life insurance companies have decided to adjust some of their application and approval policies. Companies aren’t accepting anyone with the pre-existing condition.

If you’ve contracted COVID-19 and aren’t eligible for life insurance coverage now, rest and quarantine and you should be able to reapply again later.

Many life insurance companies have halted or temporarily suspended applications for older people. Life insurance companies have also decided that some conditions are riskier to insure now than they were before COVID-19. Diabetes and asthma are two of the conditions that are becoming increasingly harder or more expensive to buy during the pandemic.

Top Life Insurance Companies by Market Share

There are multiple ways to check and see how stable and reputable a company is.

Many credit rating services let you compare companies against each other and read reviews from their clients. The rankings of a life insurance company are important because there are over 800 life insurance companies in the United States. You need to know which ones are reputable and will be there when your family needs them.

The market share of a company is found by dividing total sales, or revenues, of the company by the industry’s total sales over a fiscal period.

Top 10 Life Insurance Companies by Market Share (NAIC)
CompaniesMarket Share
2018
Market Share
2017
Market Share
2016
Northwestern Mutual6.42%6.38%6.48%
Metropolitan Group6.00%7.37%7.65%
New York Life 5.68%5.70%5.61%
Prudential of America5.57%5.48%5.49%
Lincoln National 5.36%4.55%4.44%
MassMutual4.19%4.37%4.27%
Aegon / TransAmerica2.94%2.89%2.96%
John Hancock2.83%2.80%2.93%
State Farm2.83%2.76%2.82%
Minnesota Mutual2.7%2.52%2.51%
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The company with the highest market share in 2018 is Northwestern Mutual with a share of 6 percent. In previous years, the Metropolitan Group had the highest market share, but Northwestern Mutual took the lead in 2018.

Sample Life Insurance Rates

Comparing rates from different companies is an easy way to research which companies have the most affordable rates. This table shows rates for non-smokers.

Average Annual Life Insurance Rates for Non-Smokers
Non-Smoker Marital Status, Age, & GenderAverage
Annual
Rates
New York Life Prudential
Financial
Lincoln
National
MassMutualAegon /
TransAmerica
John HancockState Farm
Single 25-Year-Old Female$164.50$158.00$195.00$187.00$132.00$164.00$172.50$143.00
Married 35-Year-Old Female$170.47$164.00$196.00$191.00$137.00$161.00$178.30$166.00
Single 25-Year-Old Male$183.61$152.00$237.00$231.00$147.00$176.00$178.30$164.00
Married 35-Year-Old Male$190.40$160.00$248.00$238.00$151.00$171.00$189.80$175.00
Married 45-Year-Old Female$247.50$262.00$314.00$239.00$209.00$229.00$241.50$238.00
Married 45-Year-Old Male$274.59$245.00$378.00$283.00$230.00$255.00$292.10$239.00
Married 55-Year-Old Female$417.01$414.00$496.00$435.00$373.00$453.00$407.10$341.00
Married 55-Year-Old Male$543.23$696.00$584.00$615.00$451.00$527.00$533.60$396.00
Single 65-Year-Old Female$898.76$924.00$941.00$903.00$763.00$1,139.00$937.30$684.00
Single 65-Year-Old Male$1,308.00$1,416.00$1,412.00$1,577.00$1,049.00$1,367.00$1,380.00$955.00
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Massachusetts Mutual, New York Life, and State Farm have the lowest life insurance rates for non-smokers. All these company rates seem comparable to the average rates. This table shows rates for smokers.

Average Annual Life Insurance Rates for Smokers
Smoker Age & GenderAverage
Annual
Rates
New York LifePrudential
Financial
Lincoln NationalMassMutual Aegon /
TransAmerica
John HancockState Farm
25-Year-Old Female$248.90$210.00$267.00$229.00$200.00$290.00$326.30$220.00
35-Year-Old Female$289.34$252.00$321.00$251.00$235.00$345.00$353.40$268.00
25-Year-Old Male$328.31$346.00$344.00$310.00$230.00$373.00$440.20$255.00
35-Year-Old Male$366.70$416.00$412.00$326.00$281.00$390.00$461.90$280.00
45-Year-Old Female$494.59$464.00$592.00$520.00$387.00$565.00$523.10$411.00
45-Year-Old Male$648.16$739.00$729.00$642.00$460.00$719.00$777.10$471.00
55-Year-Old Female$999.43$864.00$1,101.00$1,193.00$770.00$1,365.00$949.00$763.00
55-Year-Old Male$1,386.70$1,428.00$1,408.00$1,665.00$990.00$1,761.00$1,536.90$918.00
65-Year-Old Female$2,267.36$1,884.00$1,846.00$3,079.00$1,391.00$3,507.00$2,184.50$1,980.00
65-Year-Old Male$3,333.99$2,868.00$2,932.00$4,671.00$2,066.00$4,451.00$4,091.90$2,258.00
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All of State Farm’s rates are lower than the average rates for smokers. Lincoln National and Massachusetts Mutual also had low rates in comparison to the average life insurance rates.

What Is Voluntary Life Insurance vs. Basic Life Insurance: The Bottom Line

Should you get voluntary life insurance? Should you get basic life insurance? After reading this guide, we hope you are more ready than ever to make this decision.

Voluntary and basic life insurance are both insurance plans that you can get from your employer. While there are pros to getting life insurance from your employer, such as low premiums, there are also cons. Individual life insurance offers you more of a variety of options, but the premiums do tend to be higher.

Now that you’ve learned what is voluntary life insurance vs. basic life insurance, click our FREE life insurance quote tool to compare quotes for voluntary and basic life insurance and find the best rates. Get started now.

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Frequently Asked Questions: What Is Voluntary Life Insurance vs. Basic Life Insurance

Here are answers to frequently asked questions about voluntary life insurance vs. basic life insurance.

#1 – Does voluntary life insurance have cash value?

It is possible to get cash value from voluntary life insurance but it is rare. Most voluntary life insurance policies offer term life insurance quotes. Term life policies do not accrue cash value. Life insurance companies who offer whole life insurance as a voluntary life insurance option may be eligible for a cash value.

#2 – Can you drop voluntary life insurance at any time?

If you want to cancel your voluntary life insurance then you should speak to your insurance company. They should be able to assist you and more than likely cancel the policy for you. Many life insurance companies offer online customer service options on their website so you can call the life insurance company or contact them online.

#3 – Should I get life insurance through work?

That depends on your needs. While insurance through work is easy to get and can be cheaper, it may not offer enough coverage for you and your family. Remember, you usually lose your voluntary life insurance if you leave your job.

#4 – What is the best age to get life insurance?

If you are not sure at what age you should buy life insurance then that’s okay. There is no perfect age to purchase life insurance. Since rates get locked-in when you purchase your policy, it makes more sense to buy your coverage sooner than later.

It is most important to buy life insurance when your loss of income would affect those you support. Life insurance coverage also helps pay your end of life expenses, life burial expenses.

#5 – What happens to term insurance if you don’t die?

At the end of your term life, your coverage will end. Before your policy ends, your insurance company should allow you to convert the policy to a permanent, or whole life, policy. It may be cheaper to buy a new term life policy than converting your current one.

At this time, you should find out how much it will cost to convert your existing policy and compare it to your company’s current term life policies. Then, compare those rates to other company term life rates.

References:

  1. https://content.naic.org/cipr_topics/topic_term_life_insurance.htm
  2. https://www.dfs.ny.gov/consumer/cli_rider.htm
  3. https://www.mib.com/risk_selection_mib.html
  4. https://www.bls.gov/opub/ted/2017/the-rising-cost-of-dying-1986-2017.htm