What is Supplemental Life Insurance

If you have life insurance but you additional coverage to your existing plan, then you should consider getting supplemental life insurance.

For instance, if your employer offers life insurance as part of your employee benefit but you need additional coverage that covers your family’s needs in case something happens to you, this insurance is ideal for you.

This article will discuss supplemental life insurance and why you should consider purchasing a policy.

What is Supplemental Life Insurance?

Supplemental Life insurance is a type of life insurance that provides additional coverage to an existing life insurance plan. This policy can be purchased through an employer or a private insurance company.

In addition, this insurance is ideal if your current policy doesn’t offer enough coverage or if you need specific benefits. This insurance can provide extra support for your loved ones if you pass away unexpectedly.

How does it Work?

This insurance as stated above provides additional coverage to your existing life insurance.

While your basic life insurance policy is typically paid for by your employer and covers one or two times your annual base salary, most employers don’t extend coverage to commissions, stock incentives, etc.

 In this case, supplemental life insurance can provide a higher coverage but you will pay the premiums.

It is however essential to note that you will need to have basic life insurance before you can be eligible for this coverage.

Pros and Cons of Supplemental Life Insurance

Before purchasing this insurance, you must understand the advantages and disadvantages of this policy.

This section of the article will outline some of the pros and cons of this insurance:

Pros

• It offers higher coverage limits and this is typically three to ten times your salary.
• Also, it offers easy accessibility.  Most times, no medical exam is required
• Typically, lower rates due to group pricing
• Lastly, spouse and dependent life insurance may be offered at a lower rate.

Cons

• Rates increase as you age
• Also, coverage is only forced if you’re actively working with the company
• It offers limited customization with fewer options for riders compared to individual policies
• Lastly, employers can change benefits which could impact your coverage

Types of Supplemental Life Insurance

Here are some of the types of supplemental life insurance coverage you can purchase:

Supplemental Employee Life Insurance

This coverage may increase your coverage as an employee.

Supplemental Family Life Insurance

This coverage provides death benefits if your spouse passes away. It also covers the death of your child or qualifying dependent.

Supplemental accident death and dismemberment

This coverage is designed to cover beneficiaries in case of death or to you in case of dismemberment.

How Much Does it Cost?

The cost of this policy depends on where work. This is due in part to how insurers calculate group life prices.

Most insurance companies consider data about the group as a whole such as the number of employees and their average age. However, this data might also vary from company to company.

The group coverage can however be lower than if you buy your coverage. In general, the cost of this insurance varies and can be determined by several factors such as your age, the place you work, etc.

How Much Supplemental Life Insurance Should I Get?

To determine the right amount of coverage you need, you will need to consider your family’s financial needs and how well your current coverage would support them when you’re no more. Here are some quick considerations:

Assess your Financial Obligation

Firstly, start by calculating major expenses your loved ones might face and these include mortgage payments, outstanding debts, and future college costs for children.

Determine Existing Coverage

Next, you will have to look at what your base group life insurance policy already covers. This insurance can help bridge the gap by ensuring enough support for your dependents if your base policy is limited.

Benefits of a private policy

While this insurance is convenient, it doesn’t follow you If you leave your job.

Thus, a private policy adds an extra layer of security thereby giving you coverage that is not tied to your employment.

Most private policies also offer more flexibility with customizable coverage levels and riders.

Limited Underwriting Advantage

If you have health issues, group and supplemental life insurance might be ideal for you because they often involve limited or no medical underwriting.

Thus, it makes it easier to get additional coverage even if you have conditions that would otherwise impact your coverage or eligibility.

You should consider these factors before deciding the appropriate amount of supplemental life insurance coverage.

Is It Worth It?

This might be an ideal coverage for you if your basic life insurance coverage isn’t insufficient.

However, you must weigh your options and consider individual life insurance options before committing to supplemental coverage through your employer. 

If you are still not certain whether this coverage, a financial consultant or insurance professional might offer more personalized guidance.