Voluntary Employee Life Insurance
- Discover what voluntary employee life insurance is, including available benefits and the difference between basic life and voluntary employee life insurance.
Purchasing life insurance is an excellent way to ensure that your family is provided for if you pass away. If you're an employee, you may be entitled to purchase voluntary employee life insurance through your employer's benefits package. Below, you can find out what voluntary employee life insurance is and how it works.
What Is Voluntary Employee Life Insurance?
Voluntary employee life insurance is a type of insurance that you can purchase through your employer's benefits scheme. You can purchase coverage immediately after starting your new job, after a qualifying event like becoming a parent or during the yearly open enrollment period. Many voluntary employee life insurance schemes let you purchase coverage for your spouse and children, but you should expect the coverage amount to be lower.
Whether you're eligible for a voluntary employee life insurance policy depends on the terms of your employer's benefits package. For example, you may need to work a certain number of hours per week to qualify. There is no obligation to purchase voluntary employee life insurance, so it's worth shopping around to see if you can get a better deal elsewhere before committing.
If you choose to enroll, your monthly premiums will be taken from your paychecks. As your employer sponsors your insurance policy, your monthly premiums may be lower than a typical life insurance plan purchased privately.
Voluntary Employee Life Insurance Optional Benefits
When you purchase a voluntary employee life insurance policy, you may have the option to purchase additional benefits and riders. For example, you may be eligible for accelerated benefits, giving you access to your death benefit if you develop a terminal illness.
One of the most important factors to check when deciding whether to purchase voluntary employee life insurance is whether your policy is portable. A portable policy lets you continue your coverage even if you stop working for your employer.
Types of Voluntary Employee Life Insurance
Most voluntary employee life insurance plans are level term policies. This means that you pay a fixed monthly premium for a fixed, guaranteed death benefit if you die. However, term life insurance policies don't accumulate cash value and only cover you for a set period, usually up to 30 years. Therefore, your coverage ends if you outlive the policy term, making term life insurance the most affordable type of voluntary employee life insurance.
Occasionally, employers may sponsor whole life (permanent) voluntary employee life insurance policies. Unlike a term policy, a whole life policy covers you for your entire life. Your premiums are invested, which means that the cash value of your policy could increase over time. Some insurers provide a fixed interest rate while others allow variable investing. Variable life insurance could yield more significant returns, but it's also higher risk than other insurance types because the policy's cash value could decrease.
What Is the Difference Between Basic Life and Voluntary Employee Life Insurance?
Many employers offer basic life and voluntary employee life insurance. All employers must provide basic life insurance if they have 50 employees or more. Basic life insurance applies to all workers and doesn't cost the employee anything, but the coverage is typically lower than voluntary life insurance policies.
On the other hand, voluntary employee life insurance policies are an optional supplement that workers pay for, and employers aren't obliged to include them in their benefits package. Voluntary policies generally come with more benefits than a basic life policy, such as portability and accelerated benefits.
What Is an Example of a Voluntary Employee Benefit?
Voluntary employee benefits are products included in their employer's benefits package. These benefits could include insurance products such as voluntary employee life insurance, but they could also incorporate other services like financial counseling. Employees usually contribute toward the cost of voluntary employee benefits or cover the entire cost. However, they will generally pay lower premiums than private beneficiaries because their workplace scheme gives them access to group rates.