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What Is Voluntary Life Insurance? Definition & Its Types

Voluntary life insurance is an option offered to employees by employers, and it provides a cash benefit when the insured dies. Voluntary policies are generally less expensive than individual market-sold plans because they’re sponsored by your employer.

Voluntary life insurance offers financial protection for beneficiaries in case of death while at work or on company property; if you have such coverage through your employer then premiums will be much cheaper as well.

KEY TAKEAWAYS

  • Life insurance is a way for people to protect their assets and loved ones. Voluntary life insurance allows employees the option of providing themselves with protection through an employer. If they pass away, beneficiaries will be provided with money in order to cover expenses such as funeral costs or mortgage payments on homes that are now unoccupied by family members after the death of workers who contributed financially before passing away.
  • A health insurance plan is often paid for by a monthly premium, which usually takes the form of payroll deduction.
  • Somewhere between the first and fifth day of hiring, you’ll get your package just in time to show off at tomorrow morning’s meeting.
  • You can save money by purchasing life insurance through your employer. Not only is it cheaper than a retail policy, but you may also receive an income replacement benefit that will supplement the salary of your loved one who has died or become disabled for more than six months.

Let’s Understand

Insurance companies are always looking for ways to create new products and services that will draw in more customers, but sometimes the best product is a simple one. 

That’s why insurance providers have now started creating voluntary life insurance plans with additional benefits like coverage portability or riders such as increasing the number of guaranteed issues.

Many people do not think about getting life insurance until they are in their 40s and 50s. But there are many benefits to buying it earlier, such as the ability to accelerate benefits if you’re terminally ill or buy a premium for your spouse who will be left behind with debt obligations when you die. 

Even though most of us have heard about payroll deductions from our jobs, few know that these can also mean more affordable premiums while we work on paying off student loans and other higher-interest debts first before saving up some money for those future expenses like retirement planning.

You can obtain additional benefits, such as waiver of premium and accidental death and dismemberment riders for an extra fee when you buy insurance.

Voluntary life insurance can be a great way to provide for your loved ones. While this type of coverage is optional, it will help you achieve the financial security and peace of mind that comes with knowing they are taken care of in case something were to happen to you. 

It’s important though not just anyone who wants voluntary life insurance gets approved or has access – some bases require “open enrollment” periods where employees have time before their policies expire (usually one year) when they can reexamine what kind of policy would best suit them personally based on changes like marriage, birth/adoption announcements or divorce settlements.

Types of Voluntary Life Insurance

While there are many ways for employees to save money, one of the most beneficial is by choosing voluntary life insurance. The two types: whole and term, can cover a range from $20k up to 100K dollars or more in case an employee passes away prematurely due to illness or accident.

Voluntary Whole Life Insurance

Whole life insurance is a permanent type of coverage that protects the insured until they die. In contrast to term policies which only cover you for several years, whole life will protect your entire lifetime as long as it’s elected without any conditions like age or health requirements. 

Whole Life Insurance also accumulates cash value over time just like other types of protection plans such as 401(k)s with investments in stocks and bonds depending on what type of policy an individual selects when signing up for their plan.

Voluntary Term Life Insurance

Voluntary term life insurance is a great option for those who just need to protect themselves or their loved ones in the case of an unfortunate event. People don’t have to worry about building cash value and variable investing because they’re not available with voluntary policies, which makes premiums less expensive than whole-life equivalents. 

However, there are some drawbacks that people should be aware of–such as renewal rates potentially increasing after policy expiration.

Example of Voluntary Term Life Insurance as a Supplement

Jordan’s employer offered voluntary term life insurance as a supplement to their whole life coverage. Jordan, being married with children, has been given the advice that they should maintain at least $300,000 in total cover while their kids are minors a much higher number than what is provided by his current policy. 

He elects this additional coverage until he can provide for them on his own without any extra help from an outside source such as supplemental income or benefits like work-related health and dental care options.”

Should you get voluntary life insurance?

Voluntary Life Insurance can safeguard against financial disasters that originate from the loss of a loved one. These policies are advantageous for employees who may have pre-existing health conditions, as they do not require medical examinations to be approved. 

Low cost and easy availability make this an attractive benefit among many firms with workforces seeking reliable coverage in their time of need.

Can you cash out?

Group term life insurance is a type of coverage that has no cash value, and it’s meant to supplement other forms of savings. You can’t take out any money from this kind of policy whether it be an individual or group one.

Is this insurance portable?

Portability: This little-known provision allows an employee to keep their voluntary life insurance policy after leaving a job, even if that employer terminates them. This is always the best option for those who want to protect themselves and their loved ones from dying before retirement age or becoming disabled while working full time.

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