What is a voluntary benefit in the workplace?
If the benefits package at your new job is like many in Canada, it includes these common types of coverage: life insurance, supplementary medical and dental, accidental death and dismemberment insurance and long-term disability. Typically, your employer pays for some of these up to a certain amount, and you pay the rest.
But you may see some other, optional benefits offered. These are known as voluntary benefits and may include:
- Optional additional group life insurance
- Optional life insurance for your dependants
- Critical illness insurance
- Home and automobile insurance
Advantages of voluntary benefits
While not strictly speaking voluntary benefits, your employer may also offer group discounts for gym memberships, eyeglasses and other health-related products or services. Along with the cost savings associated with group rates, you can be confident that your employer has investigated and approved the benefits provider.
Voluntary benefits also offer another significant advantage: convenience. Keeping track of the renewal dates, premiums and policy provisions of the various types of insurance coverage your family requires can be a challenge. By purchasing voluntary benefits through your employer, you have the convenience of payroll deduction and, with many providers, comprehensive online access to all relevant terms and claims information.
You may also want to consider group coverage if you have health problems that might prevent you from qualifying for individual life insurance or make it very expensive, as group life insurance up to a certain level of coverage is typically offered without the need for a medical examination. Group critical illness insurance policies, however, usually exclude pre-existing medical conditions.
What are the most common voluntary benefits?
The most common voluntary benefits offered to Canadian employees, according to the Conference Board of Canada, are optional life insurance and critical illness insurance.
Do you need voluntary life insurance?
To help determine if you could benefit from additional life insurance, you can start by calculating how much life insurance you need. Plug in information such as your income, assets, current outstanding debt and how much replacement income your family will need if you die. The calculator subtracts your total liabilities from your total assets (including the core level of life insurance provided by your employer) to come up with the amount of additional life insurance you need. Similarly, you can calculate how much critical illness insurance you require.
Finally, group optional life insurance and critical illness policies have uniform provisions for all participating employees. If you want more personalized coverage than your voluntary benefits offer, you may want to consider purchasing an individual policy.