What is Voluntary Life Insurance?

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Working full-time for an employer often brings you a great benefit, which can be life insurance. Employers often offer eligible employees group life insurance as a free employee benefit. Voluntary life insurance allows you to purchase additional benefits on top of that.

With voluntary life insurance, you have the option to purchase additional life insurance and keep it for the duration of your employment with the company. The cost is deducted from your salary.

Membership organizations and trade unions also sometimes offer voluntary life insurance.

Types of Voluntary Life Insurance

Voluntary life insurance can be available as term life insurance or whole life insurance.

Voluntary term life insurance

A term insurance policy is for a specified period of time, such as ten years. After that period, you may have an additional chance. Term life is usually less expensive than whole life insurance.

Voluntary insurance coverage

Whole life insurance and global protection remain in place for their lifetime. These types of rules can generate income that you can access when needed.

Accidental Death and Dismemberment (AD&D)

AD&D insurance covers people who die as a result of an accident, such as a fall. It also provides compensation for special injuries, such as the loss of a limb. Employers often offer AD&D voluntarily at reduced rates. If you need supplemental life insurance, it is best to purchase supplemental, group term or individual life insurance.

Advantages of Voluntary Life Insurance

Here are some reasons to consider buying voluntary life insurance:

  • Fees are deducted from your paycheck using tax dollars.
  • Some employers allow employees to add life insurance for a spouse or children to the life insurance policy, at an additional cost.
  • It’s easy to register during your employer’s registration process.

Disadvantages of Voluntary Life Insurance

These policies also come with some drawbacks:

  • In most cases you do not need to take a life insurance test to qualify for your employer’s life insurance. This means that you are eligible for treatment even if you have pre-existing health conditions. But if you need additional, voluntary life insurance, the insurance agent may ask you a “Statement of Health” or “Informal Medical Evidence,” and questions about your overall health. Depending on your answers, the insurer may approve the treatment or request a Medical Note or life insurance test.
  • Although some voluntary insurance policies are portable, most end once you leave your job.
  • Voluntary life insurance is structured to attract more employees. You don’t get bells and whistles like life insurance riders.
  • You may need to work fewer hours to qualify for voluntary life insurance. For example, an employer may only provide benefits to full-time employees.

Is Voluntary Life Insurance Right For You?

Voluntary life insurance can make sense for many people—especially those looking for a convenient, complementary option on top of an employer-provided life insurance policy.

This type of registration is easy. A medical examination is not usually required, and is often only required when choosing workers’ compensation benefits.

Even if you have voluntary insurance, it may not be enough to cover all of your life insurance needs. Consider employer-sponsored insurance as a supplement, and buy life insurance, which will be yours no matter where you go for work.

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