What Does Voluntary Term Life Insurance Cover?

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Voluntary life insurance, also known as group life insurance, is typically offered by employers to help provide their employees with peace of mind. The coverage and benefits of voluntary life insurance depend on the type of policy selected, which can be either voluntary whole life insurance or voluntary term life insurance.

Voluntary Whole Life Insurance vs. Voluntary Term Life Insurance

The main difference between these two types of insurance is the length of coverage and the cash value component. Voluntary whole life insurance lasts the entire life of the employee and includes a tax-free savings account that accumulates over time. On the other hand, voluntary term life insurance lasts for a specific amount of time, like 10, 20, or 30 years, and does not have a cash value component.

Benefits of Voluntary Life Insurance

The main benefit of voluntary life insurance is the guaranteed payment to the beneficiary when the insured employee passes away, also known as the death benefit. The payout amount depends on the policy selected, but it is usually less expensive to obtain coverage through an employer than through an individual life insurance plan. Other benefits of voluntary life insurance include:

  • Portability, allowing employees to continue carrying their coverage even if they leave their employer (depending on the company’s guidelines)
  • Ability to scale the amount of the death benefit up (if the employer allows it)
  • Optional riders or add-ons available, such as the ability to accelerate benefits or supplemental life insurance for dependents
  • Generally not taxable if the guaranteed payment is less than $50,000


If you are considering voluntary life insurance, it’s important to understand the benefits and limitations of each type of policy. While voluntary whole life insurance may offer more long-term benefits, voluntary term life insurance may be a more affordable option for some employees. If your employer does not offer voluntary life insurance or the plans offered do not provide the benefits you need, individual term or whole insurance may be a better choice.

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