Voluntary Life Insurance

A financial protection plan that provides a beneficiary with cash in the event that the policyholder dies. Voluntary life insurance is an optional benefit offered by some employers where the employee pays the premium. The premiums, which are based on age and the amount of insurance purchased, may be less expensive than individual life insurance premiums because of an employee group discount.

Some voluntary life insurance plans offer additional benefits, such as the option to purchase insurance above the guaranteed issue amount by providing evidence of good health; coverage portability if the policyholder changes jobs; accelerated benefits if the policyholder becomes terminally ill; and the option to purchase life insurance for spouses, domestic partners and dependents.

This type of insurance is a good idea for many people because if they enroll within a short period of becoming employed, they often will not have to provide evidence of good health to be insured up to the guaranteed issue amount. Thus, by participating in a group voluntary life insurance plan, individuals who might not be eligible for life insurance otherwise can obtain coverage. However, the guaranteed issue amount may not provide as much life insurance as the policyholder needs.