Learn More About Voluntary Life Insurance and if You Should Buy It
Decisions about your life insurance are important for your family and your peace of mind. There are many different insurance options when it comes to financial planning and your life insurance plays a critical role in that plan.
You may be wondering what voluntary life insurance is and if it is a smart investment you should make to supplement your financial life plan. Regardless of your financial goals, understanding more about your life insurance options is helpful.
Read on to learn more about what voluntary life insurance is then reach out to the experts at eINSURE for more help.
What is Voluntary Life Insurance?
Voluntary life insurance is a type of supplemental life insurance offered by employers to their employees. It is an optional benefit the employee may elect after they are hired. Some employers have a waiting period after hire before which the benefit is effective.
Employer voluntary life insurance plans vary in scope and detail. Your plan may be subsidized by your employer or have additional riders you may purchase to extend your coverage if you wish.
Benefits of Voluntary Life Insurance
There are several benefits of voluntary life insurance.
- Less expensive – Because your employer is sponsoring the group life insurance plan for its employees, the cost is often less expensive than it would be to purchase the same plan as an individual consumer seeking insurance in the retail market.
- Payroll deduction – Many times the monthly premium for a voluntary life insurance plan can be automatically deducted through payroll, making the payment almost painless. This also makes it a convenient option since you do not have to send payments or pay late fees for missed installments.
- Convenience factor – When you start at a new job, there is plenty of paperwork and onboarding tasks to keep you busy so adding the life insurance application does not add much to your plate. It is convenient to apply because your employer has already selected a carrier and plan – all you need to do is enroll. The paperwork is streamlined and less cumbersome than starting anew with a different carrier on your own.
- Additional benefits available – Often insurance companies offer additional riders that can be purchased to add more benefits to the standard voluntary life insurance policy provided.
- Portability – Voluntary life insurance plans are generally able to be continued once employment ends. The employee has a certain period of time after leaving their employer to move their policy to an individual one. Be sure to ask for details about how to transport your policy if you intend to change employers. If you are laid off, you may be looking for ways to cut costs but consider if you want to keep your life insurance policy – it could be more cost-effective than purchasing a new one in the future.
- Easy enrollment – It is easy to enroll in voluntary life insurance when you are first hired. If you reject the coverage when you are hired, you may have to wait for the next open enrollment period or a qualifying change in your status (like marriage) to enroll. That is why it is important to understand more about voluntary life insurance before you reject it and have to wait for your chance to enroll.
- Coverage for spouse or dependents – You may be able to add coverage for your spouse or dependents under your voluntary life insurance policy. They typically are eligible for less coverage than the employee, but this can still be a viable coverage option for family members.
Types of Voluntary Life Insurance
There are two types of voluntary life insurance plans you may elect to purchase.
Voluntary Whole Life Insurance
Voluntary whole life insurance is a policy that covers the insured for life, as long as premiums are paid. Whole life insurance offers a cash value benefit where cash value accrues based on investments. This can mean your policy grows in value. Policies that accrue cash value can be helpful as they may allow you to borrow against the cash value or to withdraw some of the cash value early.
Voluntary Term Life Insurance
Also known as group term life insurance, term plans are policies that provide coverage for a specified period of time, for example, 10, 15, or 20 years. Term life insurance policies only pay out if the insured dies during the policy term.
In contrast to voluntary whole life insurance policies, term life insurance policies do not accrue cash value or grow in value through investments over the life of the policy.
Term life insurance can play a role in your overall financial planning, depending on your financial goals. For example, some people use their employer’s voluntary term life insurance plan to augment their universal whole life insurance they have purchased with their spouse. Your agent can review your options with you to help you make the best choice depending on your financial goals.
Voluntary life insurance can play an important role in your overall financial plan. If you are changing employers or considering enrolling, make sure you understand the benefits and options your employer’s plan offers. There are many benefits to enrolling in an employee life insurance plan, so consider carefully before you reject it. Your agent is a key partner to help you understand your options and help you make the best choice to fit your family’s needs.
Using a voluntary life insurance plan to supplement your existing life insurance is a sound financial practice. For example, many people use voluntary term life insurance to augment other whole life policies they own. This can offer additional peace of mind to your family or allow you to name an additional beneficiary for the funds.
How do I Learn More?
To learn more about voluntary life insurance, contact the experts at eINSURE. Our licensed professionals will be happy to answer any questions you have.