Voluntary Life Insurance – Working full-time for your employer often comes with several benefits, including life insurance. Eligible employees are usually provided with life insurance as part of the company’s plan, free of charge.
Many employers also offer VLF, which allows employees to buy extra coverage. This ensures they are protected from more risks.
Voluntary life insurance is an optional type of life insurance. It can be added to a group life insurance policy, which is commonly provided by employers.
It’s also known as optional or supplemental life insurance. In addition to employers, labor unions and membership organizations may offer this type of insurance.
Types Of Voluntary Life Insurance
VLF comes in three types: term life insurance, whole life insurance, and accident death and dismemberment (AD&D) insurance.
Voluntary Term Life Insurance
This is a type of insurance with fixed rates for a specific period, usually between 10 and 30 years. After the term ends, the policyholder can often renew the policy, but at a higher cost. Term life insurance is generally cheaper than whole life insurance.
Voluntary Whole Or Permanent Life Insurance
Permanent life insurance lasts for the policyholder’s entire life. It builds up cash value over time, which can be withdrawn or borrowed against if needed.
Voluntary Accident Death And Dismemberment (AD&D)
AD&D insurance covers accidental death or serious injuries, like losing a limb in an accident. Employers often offer this at low rates, and many people add it to their life insurance for extra coverage.
Who Needs Voluntary Life Insurance?
Whether or not you need this life insurance depends on your financial situation, dependents, and how much other life insurance you already have.
Employer-based VLF is offered to employees for free but only provides a limited coverage amount.
While it’s a good starting point, it might not be enough to fully meet the financial needs of you and your beneficiaries.
Who Qualifies For Voluntary Life Insurance?
Each employer has different qualification requirements for voluntary life insurance. Some base eligibility on the number of hours you work each week.
Usually, you can purchase this insurance after being hired and during the company’s open enrollment period when selecting your benefits. It’s important to check with your employer to see if you qualify for this life insurance.
Benefits
Whether this insurance is a good choice for you often depends on its benefits. Here are some reasons to consider purchasing voluntary life insurance:
- Premiums are taken directly from your paycheck using pre-tax dollars.
- Some employers allow you to buy extra life insurance for your spouse or children at an additional cost.
- It’s easy to apply for life insurance during the employer’s open enrollment period.
Another advantage is that it tends to be more affordable than regular life insurance bought directly from an insurance company.
Downsides
While there are many benefits to this insurance, there are also some drawbacks. This insurance typically covers not just the employee but also their spouse and dependents. Here are some disadvantages to consider:
- Most VLF ends as soon as you leave your job or change employers.
- Employees usually need to work a minimum number of hours to qualify.
- No medical exam is required, so you can get basic coverage even if you have health issues.
- Policies are often designed to fit a wide range of employees.
These drawbacks might make this insurance insufficient for you and your family’s needs.
How Much Is Voluntary Life Insurance?
As mentioned earlier, this insurance is one of the most affordable coverage options available. The cost of this insurance can vary depending on the type of policy and your employer.
Premiums are usually lower for voluntary term life insurance, while permanent life insurance tends to have higher premiums.
Several factors influence the cost of this insurance, including your age, policy features, gender, and coverage amount. These factors help determine the premiums you will pay.
Is This Insurance Worth Taking?
This insurance is a great option for many people, especially those looking for convenient supplemental coverage as part of their life insurance.
It’s easy to obtain when you choose it as part of your employee benefits. While having extra coverage is often very important, voluntary life insurance is a valuable choice.