How to Buy, Renew or Change Life Insurance in Open Enrollment

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Every year, something important happens on November 1: the start of the open enrollment period. Open enrollment gives you a chance to buy, renew or change your employer-sponsored disability and life insurance options.

While open enrollment isn’t the only time that you can make coverage adjustments, it is the most predictable opportunity you’ll have during the year. Anyone is allowed to alter their coverage levels within the open enrollment window that rolls around annually. If you want to make sure your disability and life insurance are in order for the upcoming year, here’s what you need to know about buying, renewing or changing your policies during open enrollment.

What Is Open Enrollment?

Open enrollment is a period of time when employees have the ability to buy, renew or change specific benefits their employers provide. It usually lasts for a few weeks. Before the start of that timeframe, people who are eligible to participate are typically notified directly by their employers or benefit providers. This heads up gives them the opportunity to make any desired adjustments to their policies or plans.

When people think of open enrollment, they generally focus on healthcare. However, any employer-sponsored insurance benefit, such as disability and life insurance, can be subject to enrollment restrictions. So, the open enrollment period is critical for those benefits, too — not just healthcare.

The exact length of open enrollment can vary. In most cases, employers offer at least two weeks. However, some may provide employees with up to four weeks, and a rare few may even allow up to six weeks. Any limitations should be specified in employer or provider announcements relating to open enrollment.

Beyond open enrollment, the only times when you can typically buy, renew or change your employer-sponsored life or disability insurance is during special enrollment periods. These are typically triggered by specific major life events. Some common events that trigger eligibility for special enrollment periods include marriages, births and getting a new job at a different company. Again, while these are usually associated with changes to healthcare, special enrollment periods can occur with any employer-sponsored benefit.

As with open enrollment, special enrollment periods usually only last a few weeks or a month. Once that window closes, you usually have to wait until the next triggering event or upcoming open enrollment season to make any further changes to your plans.

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What Types of Disability Insurance Use Open Enrollment?

Employer-sponsored disability insurance is the type that most commonly uses open enrollment periods. It allows employees to update benefits attached to their employment for the upcoming year. This timeline also ensures the requests are processed before January 1, when new plans usually go into effect.

When it comes to privately acquired disability insurance, the arrangements are usually different. In most cases, you can purchase new private disability insurance at any time of year, not just during an open enrollment period. Additionally, while a company may place restrictions on updates or changes, the way that works may differ from a typical open enrollment experience. For example, you may not be able to downgrade or cancel a policy within a contract period without facing a financial penalty. But, you could have the ability to make those changes at any time. Similarly, upgrades may be available at all times, even if you don’t experience a qualifying life event.

While that can make private disability insurance seem like a better option if you need flexibility, it’s important to note that the exact capabilities vary by insurer. So, you’ll need to carefully review the policy to determine what’s available and what your options are. Some providers may be more restrictive about changes than others.

Additionally, private disability insurance commonly costs far more than employer-sponsored options. In some cases, it can be expensive enough that paying the extra amount for the desired flexibility isn’t worthwhile. In other cases, it may even be cost-prohibitive.

What Types of Life Insurance Use Open Enrollment?

Similar to disability insurance, the only life insurance options commonly associated with open enrollment are employer-sponsored versions. With private insurance, you can usually sign up at any time. But, whether you can make changes without penalties may vary depending on the nature of the update and the terms outlined in your contract.

What Is the Purpose of Open Enrollment?

Open enrollment serves two primary purposes. First, it lets all employees at participating companies update their benefits at least once a year. That allows professionals to account for changes in their lives that don’t necessarily make them eligible for a special enrollment period. And that ultimately helps them ensure their coverage aligns with their needs.

Second, open enrollment simplifies benefits administration for employers. Without restrictions on when employees can buy, renew or change their disability and life insurance, keeping up with requests could be challenging. Using an open enrollment period instead ensures the activities occur during a set time that’s easier for plan administrators to manage.

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How to Buy or Change Your Disability and Life Insurance

In most cases, buying or changing your disability and life insurance during open enrollment is reasonably straightforward. However, the process isn’t standardized across all companies.

You may have to use an online portal or submit a paper form. There may even be cases when calling a toll-free number is part of the process. Ultimately, you’ll need to review information from your employer regarding the procedure.

How to Renew Your Disability and Life Insurance

More often than not, disability and life insurance through your employer renew automatically unless you intervene during open enrollment. You might not need to take any action if you want to maintain your current coverage levels instead of changing them.

However, even if you’d like to keep everything the same, it’s wise to review your coverage and your employer’s process. Some may require a quick confirmation that you don’t want to make any changes. If so, the procedure for doing so is typically described in any open enrollment announcements. It often only takes a minute or two to complete.

Ultimately, open enrollment is an opportunity, so make sure you explore all of your options. If you ever have questions, speak with your employer to get the answers you need to make wise coverage decisions.