What is Voluntary Life Insurance?

Life insurance helps provide security for loved ones when a main source of income is lost. Voluntary life insurance is a type of employer-provided life insurance that employees can opt into if they choose.¹

In most cases, employees will pay scheduled premiums to keep the policy active. Sometimes, it can come directly from the employee’s paycheck.¹ This feature may be attractive because they won’t have to worry about staying on top of another bill.

Read on to learn how voluntary life insurance can benefit employers and employees. We also offer individual whole and term life insurance policies, if getting voluntary life insurance through your employer isn’t an option.

Types of Voluntary Life Insurance

Voluntary Whole Life Insurance

The main difference between the two is that voluntary whole life insurance will last the entire life of the employee. Whole life insurance plans can also give employees access to the cash value. This feature accumulates over time in a tax-free savings account.¹

Voluntary Term Life Insurance

On the other hand, voluntary term life insurance lasts for a specific amount of time, like 10, 20, or 30 years. In term life insurance plans, there is no cash value component, and the policy doesn’t usually last as long. However, premium payments can be less expensive compared to whole life insurance.¹

Which Benefits Does Voluntary Life Insurance Offer?

The specific benefits depend on the type of life insurance policy chosen. Typically, one can choose between voluntary term life insurance and whole. These plans can also be referred to as group life insurance.¹

One of the main benefits offered is the guaranteed payment when an insured employee passes, otherwise known as the death benefit.¹ If it is a voluntary term life insurance plan, the employee must pass during the specified term for the beneficiary to receive the payout. If it is a voluntary whole life insurance plan, the beneficiary will be guaranteed the death benefit whenever they pass.¹ If the employer allows it, employees may be able to scale the amount of the death benefit up.

Another advantage of voluntary life insurance, both and whole and term, is that it’s usually portable. This portability factor allows employees to continue carrying their life insurance benefits, even if employment is terminated.¹ However, this depends on each company’s unique guidelines.

Employers also have the option to make other riders or add-ons available to employees. One notable option is the ability to accelerate benefits. This can allow the guaranteed payment or death benefit to be paid out early if the employee falls terminally ill. Another popular option is supplemental life insurance for partners, children, and other dependents.¹