Voluntary Life Insurance: Everything You Need to Know

As a part of employee benefits programs offered by many companies, voluntary life insurance is an optional benefit that employees can choose to take advantage of. This type of insurance is purchased by the employee, rather than being provided by the employer, and can provide an additional death benefit to their beneficiaries in the event of their passing. In this article, we will dive into the specifics of voluntary life insurance, including how it works, common questions, and why it may be worth considering.

What is Voluntary Life Insurance?

Voluntary life insurance is a type of life insurance that is offered through an employer, but is paid for by the employee. It is often an optional benefit, meaning that employees can choose whether or not to enroll in it, and they may be required to pay a portion or all of the policy premiums. Unlike traditional life insurance policies, which are typically purchased outside of an employer-provided benefits package, voluntary life insurance is often available at a reduced cost and without the need for a medical exam.

Typically, voluntary life insurance policies are term life insurance policies that provide coverage for a set period of time, such as one or two years. At the end of the term, employees may have the option to renew their coverage or choose a different type of life insurance policy.

How Does Voluntary Life Insurance Work?

If an employee chooses to enroll in voluntary life insurance, they will typically need to complete a enrollment form and designate beneficiaries. They will also need to elect a coverage amount, which may be a multiple of their salary or a set amount, depending on the policy. The premiums for the policy will be deducted from the employee’s paycheck, and the policy will provide a death benefit to the designated beneficiaries if the employee passes away while the policy is in force.

Voluntary life insurance policies are often portable, meaning that employees can take the policy with them if they leave their employer. However, the premiums for the policy may increase if the employee chooses to continue the coverage outside of their employer-provided benefits package.

What Are the Benefits of Voluntary Life Insurance?

One of the main benefits of voluntary life insurance is that it provides an additional death benefit to the beneficiaries of the policyholder. This can help to supplement other life insurance policies that the individual may have in place, such as a traditional term or whole life insurance policy. Additionally, because voluntary life insurance is often available at a reduced cost and without the need for a medical exam, it can be an affordable way for individuals to increase their life insurance coverage.

Another benefit of voluntary life insurance is that it may be available to individuals who may not be able to qualify for traditional life insurance policies due to health issues or other factors. Voluntary life insurance policies may have less stringent underwriting requirements, which means that individuals with pre-existing conditions may still be able to obtain coverage.

FAQ About Voluntary Life Insurance

Q: Who qualifies for voluntary life insurance?

A: In most cases, employees who are eligible for their employer-sponsored benefits programs will also be eligible for voluntary life insurance. However, the specific eligibility requirements may vary depending on the employer and the specific policy.

Q: How much coverage can I get with voluntary life insurance?

A: The amount of coverage that an employee can get with a voluntary life insurance policy will depend on the specific policy and the employer offering the coverage. In some cases, the coverage amount may be a multiple of the employee’s salary, while in other cases, it may be a set amount.

Q: Can I change or cancel my voluntary life insurance coverage?

A: Yes, employees can typically change or cancel their voluntary life insurance coverage at any time. However, they may need to go through an enrollment period or meet certain criteria in order to make changes to their coverage.

Q: Do I need to take a medical exam to get voluntary life insurance?

A: In many cases, no. Because voluntary life insurance policies are often available through an employer-provided benefits package, they may have less stringent underwriting requirements than traditional life insurance policies. However, the specific requirements will depend on the policy and the employer offering the coverage.

Q: Is voluntary life insurance the same as accidental death and dismemberment insurance (AD&D)?

A: No, voluntary life insurance and AD&D insurance are two different types of insurance. While voluntary life insurance provides a death benefit to beneficiaries in the event of the policyholder’s death, AD&D insurance provides a benefit if the policyholder is killed or dismembered as a result of an accident.

Final Thoughts

Voluntary life insurance can be a valuable benefit for employees who are looking for an affordable way to increase their life insurance coverage. By providing an additional death benefit to beneficiaries, voluntary life insurance can help to supplement other life insurance policies that an individual may have in place. Additionally, because it is often available without the need for a medical exam, it may be a good option for individuals who may not be eligible for traditional life insurance policies.

However, before enrolling in voluntary life insurance coverage, it’s important to carefully consider the policy details, including the coverage amount, premiums, and any limitations or exclusions that may apply. By doing so, individuals can ensure that they are getting the coverage they need to protect their loved ones in the event of their passing.