What Is Voluntary Life Insurance?

Voluntary life insurance coverage, similar to group life insurance that is offered by many employers, pays cash to your listed beneficiaries when you pass away. While you can purchase an individual plan from a financial services agent, it may be more cost efficient to enroll in voluntary term life insurance through your place of work.

Voluntary life insurance payments for premiums come out of your paycheck if you are an eligible employee and enroll. They are available in both term and whole life policies.

Types Of Policies

Knowing the differences between voluntary term life insurance and voluntary whole life insurance is essential. Voluntary term insurance protects both you and your family, and the coverage will only last for a specified period, often 5, 10, 15, or 20 years. After that period, the price tends to rise for the next term. These insurance plans are easy to budget for and generally cost less for younger individuals who are healthy. Most voluntary term insurance plans have no increase in premiums throughout the duration of their coverage, or term. Upon death, the full value of the voluntary term insurance policy goes to your beneficiaries.

Conversely, a voluntary whole life policy provides financial protection for both you and your family throughout your entire lifetime. This is true even if you stop paying the premiums on the plan at a certain age. Voluntary whole life insurance is designed to continue building cash value over time due to the focus on investments it has, investments such as mutual funds. Voluntary whole life insurance may cost more money because buyers pay both a premium and for investments.

Available Features And More

Voluntary life insurance has some features that come standard. Both term life and whole life coverage guarantee coverage for your family and yourself. Additional insurance features, such as dependent life insurance, can help cover the death of a family member such as a child or spouse. Voluntary life insurance also provides coverage in case of critical illness or total disability. There are other features, like AD&D, which is accidental death and dismemberment.

While some employers allow and encourage their workers or former workers to take their insurance policy with them after employment, many employers do not. Basic life insurance often comes automatically as a part of your employer's healthcare benefits package. When selected during enrollment, voluntary life insurance can act as a person’s sole life insurance plan, or as an additional supplementary plan to another life insurance policy.

One of the features of voluntary life insurance is that it can help you or a loved one in case of critical illness or total disability. While some employers allow employees to carry their insurance to a new workplace or convert it into an individual plan without penalty, check the plan thoroughly before planning on this to confirm. Keep in mind, though, that the individual plan may be more expensive due to it no longer being a group rate. It is smart to check with the insurance company on this as well before you enroll in their program.

Voluntary life insurance pays out cash value based on the plan you select so that it can be a simple addition to your family’s financial future plan.

It is not uncommon for an insurer to offer additional riders to plans. A plan may have a feature, for example, that allows buyers to purchase insurance that is a higher amount than the guaranteed amount. It can also include a feature that will enable the employee to continue the life insurance policy after termination of employment. People that purchase policies from the workplace should look at what features of the plan they are enrolling in has, so they know what to expect if their employment is terminating.

With features that allow the ability to accelerate the benefits if the insured is declared terminally ill, or ability to continue a plan even if they no longer work at the company, voluntary life insurance can be an excellent choice for some people.

Final Notes

Other good news is that voluntary life insurance is often immediately available to employees when they are hired. If an employee opts out, they may be able to enroll for a period each time an event that is considered life altering occurs, like marriage, the birth of a child, divorce, or a number of other life events.

Selecting the right type of policy comes with examination and understanding of the number of your dependents and their financial needs and circumstances. The ability to anticipate future needs can help people make the right choice. It is essential to do your due diligence when looking at insurance policies. General insurance is here to help this process along and answer questions. Life insurance is important, enroll now.