How voluntary life insurance works
Voluntary life insurance is an optional benefit offered by employers and some membership organizations. (With employer-offered plans, it's often on top of coverage—typically equal to one year's salary—you get for free.) You pay regular premiums, deducted from your paycheck. And if you die while covered, the insurer pays a death benefit to your beneficiaries. What's more, because you can take advantage of lower group rates—the employer's policy covers many people instead of one—it's usually more affordable than buying insurance yourself.
You can generally buy voluntary life insurance when you start a new job. Otherwise, your buying window will be shortly after hiring or during your employer's annual open enrollment period.
When choosing, simply select the coverage amount—typically in multiples of your salary—that best suits your needs. The higher the coverage, the more money will be pulled from your paycheck.
The downside: Your coverage might end when your employment does (some group policies can covert to individual ones). So, consider getting enough individual and voluntary life insurance to cover your financial bases.
What kinds of life insurance can you get at work?
Employees' expectations have changed. As a result, employers offer more than just health insurance to attract and retain talent. You might find a menu of voluntary benefits that allows you to personalize your financial protection.
Among the most common:
Employer-provided life insurance. This perk pays a death benefit upon your death. Your employer pays all or most of the premiums, and coverage is often automatic.
Term voluntary life insurance. This is extra term life insurance you can buy, at lower group rates than you can get on your own. Coverage is often in multiples of your salary. For example, if you make $50,000 a year, you'll be able to buy insurance worth $50,000, $100,000, $150,000 and so on. Higher payouts mean higher premiums—and sometimes medical exams. (Some employers offer permanent voluntary life insurance, which can grow in value.)
Voluntary spousal life insurance. You can buy this policy for your spouse, also at a group rate. The maximum coverage will typically be lower than yours.
Accidental death & dismemberment (AD&D). This policy pays out if you die or have severe injuries due to an accident. It's cheaper than other life insurance because it covers fewer causes of death. It can supplement your other coverage.
If you and your employer part ways, there's a good chance you can keep your policy by taking over your payments personally. Ask your benefits department for details.