What is voluntary life insurance?
Voluntary life insurance is an optional benefit that employers often offer their employees. It provides a cash payout to the beneficiaries of the insured in the event of the insured’s demise. . Each month, the insured pays a monthly premium to secure this payment after the time of death.. When employers sponsor this type of insurance plan, it is typically less expensive than if the individual would purchase it individually.
Some voluntary life insurance plans have riders or added benefits the insured can purchase. This might include purchasing more insurance than what is guaranteed by the insurer. Minimum health standards would typically have to be met in such a situation, but these riders are only optional.
Learn more about voluntary life insurance
When do I need to be aware of voluntary life insurance?
An example of someone who should be concerned about voluntary life insurance is an individual with dependents. Life insurance steps in to help pay for burial and funeral expenses, lost wages, and other expenses the dependents counted on. When the insured dies, it might take somewhere between 30 and 60 days to receive payment, but it’s a big advantage to those financially suffering after a death.
What is important to know about voluntary life insurance?
Voluntary life insurance isn’t required by employers, though if it’s offered, it might be a smart purchase. The insured should understand some other important factors about voluntary life insurance:
- Voluntary life insurance is paid for through monthly premiums and are typically taken by the insurance company directly from payroll.
- In most cases, voluntary life insurance is available to employees right when they are hired or within just a short time period after being hired.
- If an employer has the option of a voluntary life insurance policy, it may be more beneficial, as retail life insurance policies can be fairly expensive.
- If an employee opts out of coverage, sometimes a qualifying event or a time of open enrollment can give the employee another opportunity to opt in.