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Voluntary Life Insurance vs. Basic Life Insurance

Voluntary life insurance is offered by employers to their employees, Basic life insurance is like a contractual agreement between you and your insurer. Read on to know more.

  • 5,664 Views | Updated on: Feb 23, 2024

There are so many financial tools and terms out there that it is only natural for people to face doubt and confusion. In an internal debate within your mind wherein you are trying to figure out which is the best life insurance policy, it is highly possible that you find trouble differentiating between its different kinds and the types of benefits they offer. In this particular article, we will learn about the difference between voluntary and Basic life insurance.

Voluntary Life Insurance

Voluntary life insurance is offered by employers to their employees wherein they have to pay a relatively low premium.

  • It is an optional benefit provided by the employer that will help you and your family in times of need.
  • It enables you to buy your insurance at a reasonable group rate, and you also have the option of adding riders to it.
  • This kind of insurance allows you to customise your group insurance and provide the required financial coverage in cases of an accident, partial or permanent disability, critical illnesses, etc.

Basic Life Insurance

Basic life insurance is like a contractual agreement between you and your insurer wherein you get a protection cover for your loved ones.

  • It is said to be one of the best insurance policies as your insurer pays a death benefit as a lump sum cover to your loved ones or beneficiaries in the situation of your unfortunate demise. The decision on how to use this lump sum amount lies entirely with the beneficiaries.
  • This is not an investment or a money back scheme but a pure protection scheme for your family’s financial security - the monetary benefits are available only on death of the policyholder.
  • If the policyholder survives the term period, there is no lump sum payout.

Voluntary Life Insurance

Basic Life Insurance

Employer benefit

Private/Personal Insurance

Premium is relatively lower

Premium as per chosen cover

Less customisation

More customisation

Validity is till the time the employee is part of the organisation

Validity depends on the term period chosen by the policyholder

No medical check-up needed

Medical check-up needed

Guarantee issue provided

Guarantee issue not provided

If you are wondering whether you can buy life insurance online, then the answer is - Yes, you can. In fact, owing to the COVID-19 pandemic, many people have actively shifted to the online forum for looking after their financial tools and investments. People did buy policy online before the pandemic as well, but the frequency of online purchases has only increased post social distancing.

Whether either of the two insurances are necessary is entirely up to you, but it is advisable to get both voluntary and basic life insurance. Each has its own benefits to offer, but both of them ensure financial stability for you and your loved ones. It all comes down to choosing the best policy for which you need to have all the information so as to make the right decision. There are a host of insurers and banking institutions you can find by doing a quick search on the internet to buy policy online! Research well and choose wisely!

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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