The question of the amount of insurance you need to have is indeed a confusing one. The key point is that you need insurance coverage if you have other family member and loved ones depending on you. Determining life insurance requirements is actually trickier than what it actually seems to be. The foremost thing you need to decide is whether or not you actually need life insurance, which kind of insurance is better for you and calculating your needs. We need to be clear about our present situation, the risk to alleviate and soon we will get all answers to our questions.
If you have dependents to safeguard and you don’t have enough savings, you would definitely need to invest in life insurance. Which type of insurance should you get? If you want to keep your family safe from the possible destruction of your business after your demise, you should consider universal life insurance and if your key concern is to safeguard your family from loss of income, you may consider term insurance. Another kind of insurance is voluntary life insurance which is a monetary protection plan which offers a beneficiary with cash during the event of death of the policy holder. Read on to know more on this kind of policy.
Voluntary life insurance – What is it?
Voluntary life insurance is a fiscal protection plan which offers a beneficiary with enough cash during the event of the death of the policyholder. This is a benefit offered by employers and it is optional, which means the employee may choose it or even decide not to choose it. Here an employee has to pay a monthly premium in lieu of cash which is paid back to the beneficiaries of the policy holder upon their demise. The premiums are based on the age of the policy holder and the total amount of insurance that he has purchased. They are usually less costly than the individual life insurance premiums as they’re subject to various kinds of employee group discounts.
A breakdown of the additional benefits of voluntary life insurance
The standard voluntary life insurance policies promise cash which is paid to the beneficiaries of a person when he dies. But you will be rather pleased to know that there are some voluntary life insurance plans which offer some extra benefits. One of them is the option to buy insurance above the guaranteed amount by giving worthy proof of extremely good health conditions. Another option is coverage portability when the holder of the policy switches from one job to another. Another option is the capability to increase benefits when the policy holder suddenly becomes ill. Last but not the least, voluntary life insurance also gives you an option to buy life insurance benefits for domestic partners, spouses and other dependents.
Valid reasons behind small businesses and companies to offer Voluntary life insurance
Nowadays, such life insurance benefits offered by employers have become even more valuable than before. In the year 2014, the percentage of employees in America with group life insurance reached 46% which had exceeded the percentage of adults with individual life insurance coverage (35%). Though this is a vital benefit, there are certain limitations which are fulfilled by the voluntary life insurance policy. What are they? Let’s check out.
- Increases awareness: Voluntary life insurance boosts awareness of the requirement for coverage. Providing life insurance benefits on the basis of the willingness of the employees showers them the opportunity to know more on the vitality of this valuable coverage. Hence it increases awareness among employees.
- Provides increased protection: Life insurance usually creates a huge difference in the financial security of a spouse in case the bread-earner of the family dies before the expected time. A study done on the fiscal impact of the death of a breadwinner found out that 55% of the widows or widowers who got 3 to 4 years of household income felt monetarily secure. Amidst those who didn’t collect life insurance benefits, only 14% felt financially secure.
- Costs less than individual policies: Voluntary life insurance policies cost you less than individual term life policies. As group policies are subject to more discounts, this allows the employees to buy more coverage than what they could expect.
- Has tax perks: The IRS lets employees exclude the initial $50,000 of employer-offered group term life insurance from their taxable income. However, in order to qualify, the employer should either directly or indirectly carry this policy. Even though the employer doesn’t pay any premium, yet he carries the policy, only then can the employee qualify for this benefit. The formula also takes into account certain factors like the age of the employee, his pay, the years of service and his position.
- Covers all dependents: Employees are able to purchase coverage for children and spouses who may not have access to any other group plan. Another good thing about this kind of insurance is that employees are allowed to exclude the cost of term life insurance provided by the employer on the life of a dependent or spouse.
- Makes purchasing coverage easier: There was a study done by a life insurance research company where it was deduced that half of US households accepted the fact that they needed more life insurance coverage. But unfortunately, not many are able to purchase the amount of coverage that they may need. With voluntary life insurance, workplace enrollment gets more convenient and quicker.
- Stays even when employees leave the company: Such insurance policies stay over even when the employees leave your company. Majority of the voluntary life insurance policies offer options of conversion where an employee converts his plan to individual policy before leaving the company.
Therefore, if you’re confused about whether or not to opt for voluntary life insurance offered by your employer, take into account the above mentioned valid reasons which serve as benefits of this kind of policy. Reap the benefits and stay at an edge over others.