What Are Voluntary Life Insurance And Spousal Voluntary Life Insurance?

Shawn Plummer

CEO, The Annuity Expert

When most people think about life insurance, the first thing that comes to mind is mandatory coverage through an employer. However, another type of life insurance policy is voluntary life insurance. Voluntary spouse life insurance is a policy that an individual or a couple can purchase to provide coverage for their spouse in the event of their death. This guide will explore voluntary life insurance and spouse life insurance and how they can provide peace of mind for loved ones.

Key Takeaways:

  • Voluntary Life Insurance is optional and can be purchased through an employer.
  • It is generally more affordable and has a straightforward enrollment process compared to other life insurance policies.
  • Voluntary Spouse Life Insurance provides a cash benefit to the spouse upon the insured’s death.
  • It can be more affordable if an employer offers but does not stay with the employee if they leave the company.

What Is Voluntary Life Insurance?

Voluntary life insurance is a type of insurance you can purchase through your employer. It is not required, but it is an option that you can choose to enroll in if you want coverage. Other characteristics include:

  • Affordability and Accessibility:
    • Typically features lower premiums
    • The enrollment process is usually straightforward
  • Policy Considerations:
  • Peace of Mind:
    • Provides financial security
    • Ensures peace of mind for individuals and their loved ones
What Is Voluntary Life Insurance

Comparing Costs of Voluntary Life Insurance And Term Life Policy

Estimated Monthly Premiums for a $100,000 Policy

Age GroupTypical Insurance Company (Individual Policy)Employer-Sponsored Voluntary Life Insurance
25-34$10 – $20$5 – $15
35-44$15 – $30$10 – $25
45-54$30 – $60$25 – $50
55-64$60 – $120$50 – $100
65+$120 – $250+$100 – $200+

Assumptions:

  • The individual is healthy and a non-smoker, qualifying for standard rates.
  • The policy is a life insurance policy with a term of 20 years.
  • The coverage amount is $100,000.

Notes:

  • Typical Insurance Company: Rates are often based on a comprehensive health examination and detailed questionnaire.
  • Voluntary Life Insurance: Rates might be lower and sometimes do not require a health examination. They might be based on a simplified underwriting process and group rates.

What Is Voluntary Spouse Life Insurance?

Voluntary spouse life insurance is a financial protection plan that provides a cash benefit to a spousal beneficiary upon the insured’s death. The employee pays monthly for this plan, and in exchange, money will be given to their spouse if they die.

If the employer offers it as a benefit, it is cheaper than going out and buying individual life insurance. However, the coverage does not follow the employee if they leave the company.

Example Scenario:

If an employee is paying $20 per month for their voluntary life insurance coverage of $100,000, adding a spouse might look something like this:

  • Employee Only: $20 per month for $100,000 coverage.
  • Adding Spouse (e.g., $50,000 coverage): Additional $10 – $30 monthly.
  • Total for Both: $30 – $50 per month.
Voluntary Spouse Life Insurance

Types of Voluntary Spouse Life Insurance

Employer-sponsored voluntary life insurance can be divided into voluntary whole life and voluntary term life (group term life insurance).

Voluntary Spousal Whole Life Insurance

Voluntary whole life insurance covers the entire life of the insured. Voluntary spousal whole life insurance covers the entire life of the employee’s spouse.

Voluntary Spousal Term Life Insurance

Voluntary term life insurance is a form of coverage that provides the employee’s spouse protection for a set number ranging from 10 years to 40 years. Voluntary term insurance does not include building cash value or variable investing. As a result, voluntary term policy premiums are less expensive than whole life equivalents. Premiums remain constant throughout the policy period but may rise after it expires.

Next Steps

Voluntary life insurance is a great way to protect your loved ones if something happens to you. If you are married, you must consider buying spousal life insurance. This coverage can help ensure that your spouse is taken care of financially if something happens to you. Contact us today for a quote and learn more about voluntary life insurance benefits.

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Frequently Asked Questions

Is it good to have voluntary life insurance?

Yes, voluntary life insurance can provide financial protection and peace of mind for the policyholder and their family.

Are voluntary benefits worth it?

Yes, voluntary benefits can help reduce out-of-pocket expenses and provide additional coverage that would not be available otherwise.

What is the difference between basic life insurance and voluntary life insurance?

Basic life insurance is typically employer-provided and covers a specific death benefit. In contrast, voluntary life insurance allows the policyholder to customize their coverage, including additional benefits such as accidental death and dismemberment.

Should I get voluntary life and AD&D?

It depends on your needs and financial situation. Consider the coverage amount, cost, and other factors when deciding.

What is a good amount for voluntary life insurance?

The amount of voluntary life insurance should be based on the policyholder’s needs, such as income replacement, debts, and other expenses. A good rule of thumb is to get a policy that is 10–12 times your annual salary.

Does voluntary life insurance have cash value?

Yes, some voluntary life insurance policies have a cash value component.

Can you cancel voluntary life insurance at any time?

Yes, most policies allow the policyholder to cancel voluntary life insurance at anytime.

How to use voluntary life insurance?

Voluntary life insurance can provide financial protection for family members or business associates in the event of death or disability.

Can you keep voluntary life insurance after leaving a job?

Yes, you can keep voluntary life insurance if the policy is portable after leaving a job.

Do single people need voluntary life insurance?

Yes, single people may need voluntary life insurance if they have financial obligations such as debt or dependents to care for.

Is voluntary life insurance taxed?

No, voluntary life insurance is not taxed.

How do voluntary benefits work?

Voluntary benefits work by allowing employers to offer additional benefits to their employees that can be purchased on a pre-tax basis. These benefits can include health, dental, vision, life, and disability insurance and other supplemental coverage.

Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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