Anyone who wants to get health insurance but doesn’t have enough money can benefit from voluntary life insurance. It is an optional benefit offered by the employer to employees. With the employer standing in the gap, the cost of purchasing such insurance is reduced. You may want to know how this can happen.
This article contains everything you need to know about voluntary life insurance and why you shouldn’t pass up the offer. Enjoy a great read.
What is Voluntary Life Insurance?
Voluntary life insurance is employee benefit insurance offered by an employer. In this type of insurance, the worker pays the premium, while his beneficiaries receive the benefit, in the event that the worker dies during the term of the voluntary insurance.
However, since the employer sponsors the insurance for multiple employees, the premium payable will be less than when employees purchase insurance individually in a marketplace. Many workers can benefit from this type of insurance since the coverage is generally low and does not require any medical exam.
Also, you can take the opportunity to purchase an insurance policy for your spouse. Although not all insurance companies offer this option, many do.
How does voluntary life insurance work?
Voluntary life insurance pays benefits of a limited amount on top of death benefits. It does not require a medical exam, which means that you are qualified for this type of insurance regardless of your health status. This can be a great benefit for you as an employee, especially if you are unable to purchase private insurance due to a medical condition. With the influence of your employer, the monthly premium in exchange for insurance coverage is relatively lower than individual life insurance sold on the retail market.
Also, this type of insurance has different policy packages and you and your co-worker do not necessarily have to buy at the same price, regardless of your financial capacity. Therefore, policies vary depending on the condition and how your employer negotiates with the insurance company.
However, one essential condition that you need to find out is whether the insurance package is portable. That is, if you can still be covered by the policy in case you leave the company or the place of work to another place. Therefore, you should try to understand the terms on which you purchase your voluntary life insurance coverage.
Options offered by Voluntary Life Insurance
There are additional benefits and riders that come with voluntary life insurance. A rider means an insurance policy provision capable of adding benefits to the policy or changing the terms of insurance coverage over time.
The benefits could be as follows:
- Voluntary Life Insurance Plan Upgrade Options
- Coverage portability. That is, the option to continue with the insurance policy even if you change employers
- Accelerated Benefits
- Options to purchase a plan for spouse or other family members
- Options to remove the premium directly from the salary.
Types of Voluntary Life Insurance
Voluntary life insurance is divided into two types of life insurance: whole life insurance and term life insurance.
1. Voluntary Temporary Life Insurance
Term life insurance is pure insurance and can be purchased as voluntary life insurance as part of group insurance through your employer. With a certain amount as a premium, term life insurance offers a death benefit. Also, the premium you pay will stay at the same level for a long period of time. You may need to renew the plan when the policy you purchased expires.
2. Voluntary Whole Life Insurance
Voluntary whole life insurance is not as common as term life insurance. Whole life insurance is a kind of permanent insurance. However, permanent life insurance that is offered as voluntary insurance will come with a higher premium than term options. But the beautiful thing is that while the premium is higher, you generally accumulate cash as you go.
As a result of the nature of this voluntary insurance, you may not have a problem with the package, assuming you change employers. But then, there’s nothing wrong with finding out the condition under which you’re purchasing your voluntary life insurance.
Who Needs Voluntary Life Insurance?
Almost anyone can benefit from voluntary life insurance. However, your financial needs will largely determine whether you need voluntary life insurance. Also, your medical history may decide whether or not you qualify for voluntary life insurance. If you have a less than perfect life and a risky family history, you may not be eligible for a retail life insurance policy. But with voluntary life insurance, working for your employer qualifies you. Therefore, you can protect your family’s financial future by purchasing voluntary life insurance.
Conversely, if you’re in optimal health and have a low-risk history, you may benefit more from buying your life insurance in the marketplace. This is because the risk of low and high stakes are combined, and the premium will be the same, regardless of their status.
But that’s not to say that voluntary life insurance isn’t good. As a parent, this can be a way to safeguard your children’s financial future. This is because voluntary life insurance is generally offered at a flat rate for everyone, no matter how many children you have. Be sure to check the conditions before committing to any package.
How to get voluntary life insurance
It’s easy to get a voluntary life insurance policy. The biggest hurdle is getting an employer that offers such a policy. If your employer doesn’t offer that, he can’t do anything about it. Therefore, he can take this into account during his job search. The following steps will help you determine if you need voluntary life insurance:
- Getting Hired : The first hurdle is finding a job that offers voluntary life insurance in its package. The easiest way to find out if your prospective employer offers such a policy is to ask them during the interview process. You can suggest it to your potential employer if you don’t have the package.
- Review your options : You’ll likely be offered the employee benefits handbook when you’re hired. Since your employer has a policy, you may be eligible for the policy in full or after a stipulated period of time. If you don’t understand certain conditions, schedule a meeting with your human resources manager to answer your questions.
- Sign up: The company will give you a deadline to sign up for any benefits through the company. Be sure to submit an application before the deadline. If you miss the deadline, it means you will have to wait for the next enrollment period to register. This normally takes a year as well. If your employer updates benefit plans, you have every right to know, as that would also determine your decision.
What makes up life insurance
Life insurance contracts have three essential structures:
1. Death benefit
The death benefit is the value of the insurance for which you have been paying premiums. Upon your death, your beneficiary can enjoy this benefit. The insurance company will calculate the cash payment due for insurance before paying the value to your beneficiary.
The purchase of life insurance or any insurance stipulates an amount of money that you will pay each month to the insurance company. This money can be deducted from your salary or bank account. But before you pay the premium, the amount you pay will be determined by the type of insurance coverage you purchase and the terms on which you purchased it.
In essence, the premium you will pay will be a percentage of the amount of the insurance policy you purchased. The premium will be calculated using insurance statistical concepts, called actuarial science, to determine the risk involved.
3. Cash value
This is the amount or face value of the insurance coverage you purchased. It acts like a savings account into which you pay your premium. In other words, the reason you contribute your premium is so that your beneficiary receives the cash value upon his or her death.
Voluntary Life Insurance FAQs
When do I have the opportunity to enroll in the Voluntary Life Insurance Program?
Eligible employees have the opportunity to enroll in the Voluntary Life Insurance program once a year during Open Enrollment, which typically takes place in October and November. You cannot enroll in the Voluntary Life Insurance program at any other time of the year.
What is the maximum amount available to an employee or spouse?
During Open Enrollment, you or your spouse (under age 70) can request any amount from $10,000 up to $500,000 each.
Is life insurance portable?
Yes. You can keep this family term life insurance if you ever leave TSRI by simply completing a port-in application within 31 days of your termination date.
What are the Voluntary Life Insurance rates?
Fees are age-rated and are published each year during Open Enrollment.
Voluntary life insurance comes with its benefits. It is good for you to buy it if your pocket strength is not high. Also, if you have a medical condition, this may be a way to transfer the greater risk to the insurance company, while saving for your dependents.
- coverage.com , What is voluntary life insurance?
- scripps.edu – Voluntary Life Insurance
- lacalle.com – What is Voluntary Life Insurance and how does it work?