Voluntary life insurance plans allow employers to provide, at no cost to them, life insurance to eligible employees at rates that reflect group economies of scale. Some products offer “life and lifestyle” insurance in one policy, which can be accessed when health, life and death circumstances require. Considered life insurance, such products allow employees to receive a benefit while living.
Two primary types of life insurance are term life and whole (or permanent) life.
- Term Life Insurance: This is the original or “pure” insurance form and offers protection for a specified period of time and builds no cash value. If the insured dies during the specified term, policy benefits are paid to beneficiaries. Products offer varying durations and benefit amounts and often include embedded benefits for terminal illness and accidental death and dismemberment (ADD). Coverage durations can be annual renewable or “level” for periods such as 10, 15, 20 and 30 years, during which the premiums remain unchanged. Coverage may be portable and riders for items such as critical illness/total disability, quality of life, increasing death benefits, ADD and families are often available.
- Whole Life Insurance: This insurance plays a role in meeting current as well as future financial needs. Consisting of a permanent life insurance policy that protects the policyholder through his/her life, whole life insurance offers a completion of premiums at a predetermined age. Features of whole life plans include premiums that remain level throughout the life of the policy, guaranteed renewable protection that cannot be reduced and accumulated cash values that can be withdrawn (upon the policy’s surrender), borrowed against as a loan, annuitized or used to purchase extended or reduced paid-up insurance. Some whole life plans may also include dividends paid annually and guaranteed cash values.
Voluntary disability insurance provides benefits beyond basic health insurance, offering eligible employees income protection insurance in the form of benefits that partially replace income lost as a result of a disabling non-occupational accident or illness. When such an event takes away the ability to bring home a paycheck, voluntary disability insurance coverage can help fill the gap as payments may be used for any purpose including ongoing bills such as rent, mortgages, educational expenses, food, and car payments.
Plan variables may include:
- Combination benefits covering accidents, sickness or both
- Coverages including off-the-job coverage, 24-hour coverage or both
- Elimination periods, which are the number of continuous days (beginning with the first day of total disability) before any monthly benefit amount is payable
- Benefit periods for which monthly income benefits are payable after the elimination period ends (such periods often include choices of 90 days, six months, one year, two years or three years)
- Portability, depending upon whether the plans are offered on an individual or group chassis and the length of time an employee is employed before employment is terminated (either voluntary or involuntary)
Voluntary Accident Coverage
Offering protection beyond basic health coverage, voluntary accident insurance provides supplemental on- or off-the-job coverage and may cover deductibles and other services standard health care coverage may not provide. Some voluntary accident insurance products can be both a reimbursement and an indemnity insurance policy – expense reimbursements paid are for actual charges or up to the maximum amount stipulated per selection.
Embedded benefits of accident insurance may include:
- Accident medical expense
- Ambulance benefit
- Hospital confinement
- Accidental death and dismemberment
- Optional benefits/riders such as accident total disability, hospital intensive care, bone fracture and dislocation, and coverage for spouse and children