What is Voluntary life insurance?- How it works

Voluntary life insurance is yet, another coverage plan that offers you a beneficiary benefits package.

It’s great to know that a lot of policies have been so helpful to millions of people all over the world.

With some plans, you can expect more like; adding riders to your insurance plan. While some other packages come as a benefit once you get employed.

Now, voluntary life insurance comes with both options.

Anyone about to resume a new job must understand how insurance plans work.

Maybe you might be lucky to get an offer from your employer.

What is voluntary life insurance?

Voluntary life insurance is an optional benefits package given to employees by their employer.

It also serves as a group life insurance plan because these employers buy the group policy from an insurance company.

This way, the insurance company reduces the policy price for the employer.

Though employers offer this benefit to their new and old employees, they do not have to pay for the premium. Employees have to pay the premium from their salaries. This way, they do not have to worry about paying for these premiums monthly directly from their pockets.

Also, getting this insurance plan from an employer makes it way cheaper than when an individual buys it personally.

How does voluntary life insurance work? 

This plan has a lot of flexibility to it.

When an individual decides to buy this type of life insurance plan, firstly, they get it as a standalone plan and also have the option of adding other riders to it.

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However, if it comes from an employer and you decide to leave the organization, you can continue with your premium because it does not expire or terminate after your job. 

Except you decide to let go. If you still want to keep it, you have at least 30 days to meet up and complete the documentation of the transfer.

Individuals who cannot afford a personal life insurance plan can easily use the one from the employer. 

So, when it’s time for salary payment, the employer deducts the premium before paying the employee.

What are the types of voluntary life insurance plans? 

Whole life insurance coverage has a voluntary plan, and many employers offer either this or other types to their workers. 

Voluntary term life insurance 

Just like the original term life insurance plan, the voluntary insurance plan also has an expiry date as expected, it also has a duration of between 10 to 30 years. 

Employers offer more of this type of life insurance plan as group benefits for their workers. 

Furthermore, voluntary term life does not have many benefits options, however, it is way cheaper. 

If it expires while you still work with your company, the employer may decide to renew it which may cause the premium to increase.

Additionally, individuals who already have a whole life insurance plan go ahead to accept the employee’s voluntary term life insurance coverage just to support personal insurance coverage.

The family members of the employee who are dependents may also be included in the employee benefits. 

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If the employee passes away, the family can pick up some benefits. Also, if any of the family members pass away, the employee becomes entitled to some benefits. 

This policy is called voluntary dependent life insurance.

Voluntary whole life insurance 

 The voluntary life insurance plan has the qualities of main whole life coverage. 

First, there is a beneficiary benefit for the insured loved ones. Secondly, it doesn’t have an expiry date like term life insurance. 

More so, voluntary whole life insurance builds cash value savings and protects the policyholder for life.

Voluntary accidental death and dismemberment 

This policy also covers accidents that may happen in the work environment like; loss of limb or injuries. When this happens, the employee gets compensation in form of money from the employer.

Who should get voluntary life insurance? 

If you feel that your life insurance is not fully serving its purpose, you may have to get voluntary life insurance and attach it to your original plan.

Again, anyone who doesn’t want to go through the stressful process of having a medical exam can quickly purchase this plan because no one will subject you to going through a medical exam.

Can you borrow from this coverage?

This insurance plan is not the kind you borrow from. Especially when it’s coming from your employer because most employers offer only voluntary term life insurance.

What is the difference between group insurance benefits and voluntary life insurance?

Group life insurance is also an employee benefit you get from your employer but it only has a few coverage options.

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On the contrary, the voluntary kind is sometimes a group benefits plan but it has more options and covers more.

Do all employers offer this to their workers?

Many employers have benefits for their employees. However, an employer doesn’t need to map out employee benefits. Since no law binds them to do so, not all employers offer benefits to their workers. 

Advantages of a voluntary life insurance

  • It is pre-taxed
  • Premiums are cheap 
  • Employers deduct the premium from salaries so, the employee does not have to feel the weight of paying for premiums.
  • With the permission of the employers, employees can add family members, especially the dependent.
  • Buying a policy is not stressful at all
  • No medical examination

Disadvantages of voluntary life insurance

  • It has an expiry date
  • You have to be a full-time employee before you have these benefits 
  • Some employers do not allow the benefits to be portable
  • The insurance company may finally ask for a medical examination report if you want to add other options to it.


To sum up, this plan can serve anybody, including people with low income. 

Newly employed individuals without life insurance can wake up and discover that they and their families are now protected by the employer.

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