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If you work full time, you might have free group life insurance as part of your workplace benefits package. While this is a nice job perk, the amount of coverage offered by your employer might not be enough to cover your family’s financial needs if you die suddenly. This is where voluntary life insurance may come in handy.
What is voluntary life insurance?
Voluntary life insurance is optional life insurance coverage you might be able to buy through work. Also called supplemental life insurance, it adds extra coverage to company-sponsored group life insurance plans, which tend to be quite low.
Pros and cons of voluntary life insurance
Before buying voluntary life insurance through your workplace, consider these pros and cons:
No medical underwriting. Like with standard group life insurance, you can probably skip the medical exam and still qualify for coverage.
Limited options. Coverage is often limited to voluntary term life insurance with a maximum payout of around $250,000 or a multiple of your salary.
Less expensive. Voluntary life insurance is based on group rates, meaning everyone in your organization will be offered coverage at the same price. Because of this, it’s usually cheaper than getting your own policy.
May be contingent on employment. If you part ways with your employer, you might also have to part ways with your voluntary life insurance.
Easy to get. You can usually sign up when you start a new job or during your company’s open enrollment period, and pay for it directly from your paycheck.
Taxes. Beneficiaries will likely have to pay income tax on a portion of the death benefit if you die.
Voluntary life insurance plans differ by company. Check your employer’s benefit information or talk to an HR rep for details.