What is the difference between basic life insurance and voluntary life insurance?
Asked by: Braxton McKenzie | Last update: January 27, 2026Score: 4.1/5 (45 votes)
What is basic life insurance vs voluntary life insurance?
Voluntary Life Insurance Defined
Your employer may offer basic life insurance coverage and pay for some or all of the premium as a benefit. Voluntary coverage is an added policy on top of basic coverage. You'll need to pay for it — though it's often sold at a discounted rate.
What does basic life insurance mean?
Basic life insurance is often a free or lower-cost insurance option for employees. It's typically offered to employees or groups and provides a small amount of coverage. But if you currently have a basic life insurance plan, you may be wondering whether you need additional coverage.
Is it good to get voluntary life insurance?
Voluntary life insurance may be a good option to consider if your employer offers it, you'd like additional coverage and you want an easy way to pay for coverage. Just be sure to find out if your coverage ends if you leave your job.
What is the difference between the two types of life insurance?
Each type of life insurance is designed to fill a specific coverage need. For example, term life insurance is geared toward those who just need coverage for a certain number of years, while whole life insurance is designed for those who need straightforward, lifelong coverage.
What is Voluntary Life Insurance?
What type of life insurance is best?
A whole life policy is generally considered the most secure form of insurance. Whole life policies have more rigid premium payment requirements than universal life policies. As long as scheduled premium payments are paid, the cash value is guaranteed to increase each year.
What happens if you outlive your term life insurance?
No, with a standard term life insurance policy, you won't be receive anything back if you outlive your life insurance. So, what happens at the end of your term life insurance? Your life insurance will simply expire and you can either take out a new policy or look into other types of financial protection.
Can you cash out voluntary life insurance?
You can cash out a life insurance policy. How much money you get for it will depend on the amount of cash value held in it. If you have, say $10,000 of accumulated cash value, you would be entitled to withdraw up to all of that amount (less any surrender fees). At that point, however, your policy would be terminated.
At what point is life insurance not worth it?
When is term life insurance not worth it? Term life insurance probably isn't worth the costs if you don't have any significant debts to pass on to your loved ones or you don't have dependents or a spouse that you'd leave in a bind by passing away.
What does voluntary insurance cover?
Voluntary plans provide benefits exclusively funded by employee premiums with limited employer involvement. The plans are popular because they allow employees to choose benefits that best fit their needs. Voluntary plans range from dental to life insurance and from financial counseling to pet insurance.
Can you cash out on basic life insurance?
If you have a permanent life insurance policy that has accumulated cash value, then yes, you can take cash out before your death.
Is basic life insurance enough?
Employer-sponsored life insurance offers a way to get started with coverage, but there are considerations to weigh, including: Limited coverage. Basic life insurance may not be enough depending on your financial situation, income, expenses and family needs.
What does basic insurance mean?
Basic car insurance is a policy that only includes liability coverage. It helps cover the damage you may cause to other people and their property. That can include medical bills, repair or replacement of property and legal fallout.
Can you drop voluntary life insurance at any time?
Can you drop voluntary life insurance at any time? You may be able to drop voluntary life insurance at any time, but it is best to speak with your employer or the human resources department to make sure.
What are the benefits of basic life insurance?
Basic Life Insurance Advantages
It also provides coverage to employees who have private life insurance policies but may need extra coverage. Some of the advantages of basic life insurance include: Low to no cost: Employer-sponsored basic life insurance comes at little to no cost to employees.
Can you take a loan on voluntary life insurance?
You can request a loan from your life insurance company for any reason, and there isn't an approval process. The only requirement is that you have sufficient cash value to borrow against (minimum amounts vary by insurer).
At what age should you stop paying life insurance?
Life insurance can provide peace of mind at any age, but isn't always necessary after age 60. To see if you need life insurance, assess your family's needs, your financial resources and assets, your outstanding debts and your long-term financial goals.
What does Dave Ramsey recommend for life insurance?
Core Ramsey Teaching: You only need life insurance while you have people depending on your income. Buy a 10–20-year term policy worth 10–12 times your annual income. Since life insurance is only for the short-term, you should only buy term life insurance. (Hence the name.)
What's better, whole life or term life insurance?
Choosing between term and whole life insurance comes down to how long you want coverage and how much you can afford. Term life is more affordable but lasts only for a set period of time. On the other hand, whole life insurance tends to have higher premiums but never expires.
Is it good to have voluntary life insurance?
Voluntary term life insurance can make the most sense if: You already have permanent insurance and want to increase your death benefit at a more affordable rate. You have children and want to ensure that their needs are met for a certain period.
What is the cash value of a $10,000 life insurance policy?
Say, for example, that you purchase an insurance policy with a face value of $10,000. Once the policy matures, the cash value of the policy should equal $10,000.
How long do you have to have life insurance before it pays out?
Insurance companies can delay payment for six to 12 months if the insured party dies within the first two years of the policy.
Can you have two life insurance policies?
You can have as many life insurance policies as you like – there is no limit. Equally, there is no right answer as to how many life insurance policies you should have. The most important factor is that you have enough financial cover for your own peace of mind.
Can I cancel my life insurance policy and get my money back?
Unless you're canceling a policy during a free-look period, your premium won't be refunded if you cancel your life insurance policy. There are a few instances where you may see some money returned. For example, you may receive your accumulated cash value if you cancel a permanent policy, minus any taxes and fees.
Why are medical exams usually required before getting a life insurance policy?
The medical exam will cover your medical history and current health — it helps the life insurance company determine if you're eligible for a policy and what rate they can offer you. Explore Progressive's editorial standards for Answers articles to find out why you can trust the insurance information you find here.