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Supplemental Life Insurance Explained

Last modified: Jul 25, 2023

You may have already heard of the term supplemental life insurance. While it is considered to be a good way for individuals to take advantage of some additional protection, it is best to do your research and shop around to make sure you get the most bang for your buck.

In case you were wondering, this is going to be your guide towards supplemental life insurance. Here we are going to cover the following topics:

  • What is supplemental life insurance? 
  • Who is it for? 
  • How can you benefit from it? 

Having scoured the internet, we’ve found the most recent and reliable information for you regarding supplemental term life insurance.

Supplemental Life Insurance Explained

If you’d like to know what supplemental life insurance means, you’ve come to the right place.

When it comes to insurance policies, there are quite a few you can choose from depending on what it is you want to protect: your health, property, car, etc. Furthermore, these policies can be tailored to customer’s specific requirements.

While insurance policies are pretty much straightforward in regard to the protection they provide in particular areas, there is another type of insurance coverage called supplemental life insurance. It offers a few extra perks as compared to traditional life insurance policies.

How does supplemental life insurance work?

As the name implies, supplemental life insurance is basically an additional insurance policy that supplements the areas not covered by the existing policy. Depending on the type of employment, you might receive supplemental term life insurance from your employer. Check with your HR to find out whether that’s your case. If so, this insurance is going to be either low-cost or free for you. If your firm doesn’t provide it, you can get it from private companies as well.

You also can purchase supplemental life insurance in addition to term or whole life insurance policies. It is a way to ensure the financial wellbeing of your family in the event of your death. Moreover, it is common for folks to take out a supplemental life insurance policy to cover funeral costs, accidental death, dismemberment, or any other expenses not included in their existing life insurance policies.

When Should You Get Supplemental Life Insurance?

For obvious reasons, supplemental life insurance is not for everybody, but the following are a few scenarios when it makes sense to get one.

  • Term Life May Not Be Sufficient

Term life insurance offers users an affordable way to get financial protection for themselves and their families. But, since it is a basic policy, the coverage is often insufficient, especially if the client has a medical condition or needs coverage for other areas of life.

  • Whole Life Is Expensive

With this option, the customer gets to enjoy the complete life insurance package. Not only does it offer traditional protection, but it also includes add-ons. However, all this comes with a cost, making whole life insurance an expensive alternative for many folks.

  • Employer Supplemental Insurance Has Limitations

While employees obtain employer-provided insurance at lower rates, the downside is that most of these offer a flat amount. It just isn’t enough if you have a mortgage to pay, a family to support, and other trappings of life to take care of. Since the company’s supplemental insurance also comes with its set of limitations, such as only covering burial costs or providing accidental death benefits, it is best to opt for regular supplemental life insurance to satisfy all your needs.

How Employer-Sponsored Plans Work

Since we have just covered the reasons why employer-sponsored supplemental insurance is sometimes not enough, it could lead some folks to the question, “Do I need supplemental life insurance?” The answer is yes. You definitely should get supplemental life insurance and take full advantage of employer-sponsored plans. Let’s find out how these plans work.

One of the reasons why employer-sponsored plans are great for additional coverage is that they’re free and easy to get. No more wasting time shopping for the best prices! All you have to do is fill out a form and submit it to the HR department to enroll yourself in the employer-sponsored plan. Additionally, if you are a young individual in good health, this option could be all you need.

The company may offer a variety of supplemental insurance policies such as:

  • Vision and dental
  • Disabilities
  • Life insurance

Therefore, it’s an excellent way to get additional coverage for areas not covered by your existing life insurance plan.

Most of the policies require people to undergo a thorough medical evaluation to qualify for traditional life insurance. If you do not want to go through all that hassle, employer-sponsored supplemental life insurance can be a great option for you. What’s more, employer-sponsored group policies offer coverage to all employees at the same rate. And individuals who have been rejected from individual plans in the past can avail of the company’s supplemental insurance.

Additionally, since employer-sponsored supplemental insurance covers a group, their policies are usually designed to keep a one-size-fits-all mindset. That’s why it may not include specific insurance riders, such as accelerated death benefits or long-term care, offered by the supplemental life insurance. Keep that in mind when looking to get the company’s supplemental insurance.

What Happens to Supplemental Life Insurance When You Leave Your Job?

Generally, once you leave your job, your employee supplemental life insurance will end. It means that you have to apply for new life insurance with a broker or your new employer. Alternatively,  you can opt for converting life insurance after termination. Get in touch with your current employer to know more regarding this matter.

How Is Supplemental Life Insurance Paid Out? What Is the Difference Between Basic and Supplemental?

Supplemental life insurance is paid for out of your paycheck. In contrast, group life insurance comes as part of the employee’s benefits package and is usually free or has much lower premiums. 

Group term life insurance doesn’t have cash value and is intended solely to supplement individual life insurance, personal savings, and death benefits. The truth is, whether it is an individual or a group policy, a person cannot cash out without accrued savings. 

Basic group life insurance is the company benefit coverage available to an employee at no cost. On the other hand, supplemental life insurance is the additional coverage that the individual purchases beyond the basic plan.

Is Supplemental Life Insurance Worth It?

If you are wondering, “Should I get voluntary life insurance? the short answer to that question is yes. Supplemental life insurance is an excellent idea if your current insurance policy does not provide enough coverage for all your needs.


What does supplemental life insurance pay for?

You can purchase supplemental life insurance in addition to a whole or term life insurance policy. It provides coverage for areas such as accidental death, dismemberment, burial costs, etc.

Is it cheaper to get life insurance through an employer?

Getting supplemental life insurance through your employer is the preferred choice for younger folks in good health because it offers added coverage and is relatively easy to obtain.

What does supplemental life insurance cost?

Supplemental life insurance policies offer more coverage than basic plans. The coverage limits vary company by company. Maximum amounts typically range from $250,000 to $500,000. The cost of supplemental life insurance depends on the individual and their specific situation. You could pay anywhere between $168 to $600 a year. 

Can I borrow from my supplemental life insurance?

Borrowing from your insurance policy can be a quick and easy solution to get cash in hand when you need it. However, it is only possible with whole life or permanent life insurance policies.

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