The voluntary life insurance is an optional health insurance package that is offered by employers to their employees. It is referred to by other names like supplemental insurance or optional insurance.
This insurance ensures payment of cash to the dependents of the insured in case of the death of the primary insured individual. Here we discuss what is voluntary life insurance policy and its advantages and disadvantages in details.
In most organizations, employees have the provision to buy an additional insurance for themselves and their spouse and dependent children at an extra premium cost. This is known as the voluntary insurance policy. This gets added over and above the basic insurance that an individual already receives from their workplace.
Voluntary Life Insurance Can be the Following 2 Types
Voluntary Term-Life Insurance or the Group Term-Life insurance.Voluntary whole life insurance which provides coverage for the whole life of the insured and their dependents (if included).
In addition, individuals can choose to opt for riders like disability benefits. In that case, the premium amount is calculated accordingly and can increase quite a bit.
Voluntary insurance can also be purchased individually, but when provided under the guarantee of an employer, the premium rates are discounted by the insurer.
Pros and Cons of the Voluntary Insurance Policy
The biggest advantage of the voluntary life insurance is that it allows an individual to purchase insurance as per their needs. Suppose their base insurance does not cover the financial requirements of the entire family, they can choose to get the difference in the benefits by opting for the voluntary life insurance instead of going for a new personal policy. This effectively reduces the premium paid for equivalent coverage. It is for this reason that voluntary life insurance is also known as supplemental insurance.
Another advantage is that the insurance riders can be opted in a way that the payment to the dependents starts before the qualifying event of the passing away of the insured. This could be especially helpful in meeting the medical costs in cases of a terminal illness. This is known as the acceleration of benefits.
One drawback of voluntary insurance purchased under an employer is the lack of portability in case of termination or resignation. However, nowadays a few employers are giving the option of continuing the insurance in case of termination of service, subject to certain conditions like application with a specific time period.
Also, to be eligible for the higher benefits package, most insurers require individuals to undergo a few medical tests to ensure that their health is satisfactory.
Currently, all employers do not provide the option of voluntary insurance to their employees. However, wherever it is available, it is a great way for individuals to increase their coverage as per their needs.
This particularly helps families with new additions like a new baby or through marriage. In such cases, it is far prudent to supplement the existing personal life insurance with a voluntary insurance policy under their employer than going for a new policy altogether.
Now you know more about the types of different insurance plan, you should call our recommended insurance agent to suggest the best life insurance in Singapore. Call today!