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  • Group Health
  • Individual Insurance
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  • Employment Law
  • Tax Reform

Voluntary vs. Individual Insurance: Which is Right for Me?

Employee Benefits

Voluntary and individual insurance offer similar types of coverage, but it’s critical to understand how they differ. Knowing which one to offer your employees can help optimize your funds while continuing to provide competitive benefits.

What is voluntary insurance?

A voluntary benefits plan allows you to offer specific benefits for your employees at little or no cost to you. It can supplement your company's group health plan or stand on its own, and any employer contributions are purely voluntary.

What types of voluntary insurance are available?

Voluntary insurance covers a wide range of benefit options, and is often used to help employees secure individual life and disability coverage, regardless of their medical histories.

Coverage options include:

  • Short-term disability insurance — replaces partial income for several months or longer, depending on the policy agreement
  • Life insurance — both term and permanent life plans
  • Dental and vision insurance — two popular employee coverage options
  • Hospital indemnity and critical illness — specific coverage for cancer treatments, home health care, and other supplemental health insurance

What is individual insurance?

An individual insurance policy covers the policy holder and in some cases their family members. It can provide you with coverage when an individual does not get coverage under the group plan.

What types of individual insurance are available?

Coverage options include:

  • Health
  • Vision
  • Dental
  • Long and short-term disability – Replace partial income for three to 24 months with short-term disability, and from five years up to age 65, with long-term disability insurance.
  • Life Insurance – Either term or permanent life plans

What is the difference between voluntary and individual insurance?

While these types of insurance offer similar coverage options, voluntary insurance is employer-sponsored and offered to all eligible employees through payroll deductions; individual insurance policies are purchased by an individual on a case-by-case basis. Many employers also opt to offer group insurance to their employees. By evaluating your current stage of business growth along with your budget and employee needs, you can decide which type of insurance is right for your business at this time.


This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.