What Is Supplemental Life Insurance?

Your existing life insurance policy coverage isn’t enough? How about an add-on?

Life insurance policies provide coverage to people regarding their financial troubles. Conventional life insurance policies provide term life or lifetime coverage to policyholders, and ensure that the death benefit or the accumulated cash value is given to the policyholder.

The only motive of people choosing their life insurance plans is to have financial support for their families when they die. They either want to create a financial legacy by the death benefit, or opt for whole life policies where they can use the accumulated cash value during their life for major expenses.

But some families realize that their existing policy isn’t enough to cover their needs. Maybe there’s a loan that needs to be paid off, an outstanding mortgage, student loans or even having your kids married. Everything requires a huge amount of money.

What to do if your policy isn’t enough?

You get an add-on! This add-on coverage is called supplemental life insurance!

What is Supplemental Life Insurance?

Having additional coverage on an existing insurance policy is called supplemental life insurance. There are two ways of applying for a supplemental life insurance policy:

  • Through an employer
  • Privately

Many insurance policies are given to workers under the employer’s insurance program where the cost of coverage is covered by the employer. So if employees need coverage, they can tap the employer’s program they’re covered under and get insurance.

In such a case if employees feel that they need additional coverage to the existing policy they can ask the employer for supplemental life insurance- these are low amount of coverages and often free of cost.

You can also look for supplemental life insurance by applying for privately- go to the insurance company and tell them you need additional coverage for yourself or anyone else who is attached to the policy. They will give you a suitable plan with a proper coverage amount, and with lower premiums too.

Types of Supplemental Life Insurance

Here are the most common types of supplemental life insurance options that people like to add on their existing life insurance policies.

Accidental Death and Dismemberment (AD&D): This type of insurance pays out if the employee has a sudden accidental death, or is paralyzed or disabled due to the accident.

Accidental Death and Personal Loss Insurance: If the insured person is in coma for more than 30 days due to an accident caused at work, or is paralyzed or has suffered loss of speech or hearing as a result of a workplace incident, accidental death and personal loss insurance provides coverage by giving a set monthly amount to the beneficiaries. While deciding the policy, the amount is fixed and is given to the beneficiaries on a monthly basis.

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Spousal/Domestic Partner Insurance: Just like an add-on to your existing life insurance policy, a spousal/domestic partner insurance gives coverage to your spouse which is a percentage of what coverage you’re getting.

Burial Insurance: This is a very basic kind of supplemental insurance with a low coverage amount of up to $5,000-$10,000 to pay for funeral and burial expenses of the policyholder. Burial costs are very high in the country so many people get this supplemental insurance to pay for those.

Health Specific Insurance: If the policyholder dies due to a specific health condition like cancer or stroke, the benefit could be used to pay off pending hospital bills or funeral charges. This type of insurance is a good idea if a terminal illness runs in your family, because this way you can get ahead of unfortunate circumstances.

Supplemental Life Insurance Metlife

AD&D insurance pays benefits if you suffer a covered accident that results in paralysis or the loss of a limb, speech, hearing or sight, or if you suffer a covered fatal accident. MetLife Supplemental Accidental Death & Dismemberment (AD&D) Insurance.

MetLife Supplemental Accidental Death & D ismemberment (AD&D) Insurance:

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  • Employee: $10,000 up to $250,000 in $10,000 increments
  • Spouse/or StateRegistered Domestic Partner: $10,000 up to $250,000 in $10,000 increments
  • Dependent Child(ren): $5,000 up to $25,000 in $5,000 increments

What is Spouse Supplemental Life Insurance?

Purchasing supplemental life insurance for your spouse or domestic partner is doable, and sometimes you can also ask your employer to provide it. The coverage amount is low, up to $150,000 with premiums paid by the employer.

You may need an additional option of coverage if you feel that your spouse isn’t protected under any other source of life insurance. This way a supplemental spouse life insurance will cover your spouse as well.

Experts say that it is better to go for a private supplemental life insurance because of portability. As long as the premiums are being paid, the policy will remain in force. Usually when an employee is covered under their employer’s plan, the policy is lapsed when they change jobs. So if the spouse wants to avoid this risk, opting for a privately managed plan is probably the best option.

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What is Supplemental Child Life Insurance?

Supplemental child life insurance provides financial protection if a child dies. This coverage can be used for burial costs, funeral costs and other expenses too.

This type of additional coverage is also given to plans and existing policies, but it isn’t always advisable to buy coverage for children. However, people still find this option feasible because as the child grows older, premium costs also grow higher.

Is Supplemental Life Insurance worth it?

Now that you know what it is and how it works, the next step is to determine whether it is really worth the cost or not. There is no direct answer to this question because it fairly depends on several factors such as what is the current amount of coverage, why do you need additional coverage, do you have guaranteed expenses planned in the future etc.

The cost factor is one major reason for people to opt or drop this option.

This table gives an overview of the cost part with each coverage amount of supplemental life insurance plans.

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Coverage Option Coverage Amount 2020 Monthly Rate
Spouse/partner only $10,000 $3.49
$20,000 $6.66
$40,000 $12.71
Dependent only

(per child)

$5,000 per child $1.02
$10,000 per child $1.94
$20,000 per child $3.69
Spouse/partner and dependent

(spouse/per child)

$10,000 spouse/partner; $5,000 per child $4.51
$20,000 spouse/partner; $10,000 per child $8.60
$40,000 spouse/p artner; $20,000 per child $16.40

Note: Sample rates have been extracted online, courtesy of Iowa University.

Before you sign up for any supplemental plan with any insurance provider, think carefully. Do you really need a supplemental insurance plan? Can you afford paying the extra amount of premiums that come with this? Is there another option to make sure your existing policy’s coverage is enough?

And once you decide that you absolutely need a supplemental life insurance plan, shop around to find the best rates! Don’t settle for the first policy you see, look around and then finalize the one that is absolutely fit for your needs and budget.

Conclusion

Supplemental life insurance is an additional type of coverage that you may want for your spouse/domestic partner or your child. If they aren’t covered under any other way of policy, you could ask your employer to provide them with supplemental life insurance coverage. Of course the coverage amount will be a lot less than what you have.

A supplemental life insurance policy is a good option for spouses especially under an employer’s plan because this way the policyholder doesn’t have to worry about the cost of coverage and paying premiums as it is covered by the employer himself. The spouse gets permanent coverage until the employee stays with the company.

Regular payment of premiums each month will ensure that the policy stays in force and the policyholder receives the coverage amount when the time comes.

Sandra Johnson

Sandra Johnson

Sandra Johnson was a few years out of school and took a job as a life insurance agent in California, selling coverage door-to-door for Prudential. The experience taught her about the technical components of insurance and its benefits for individuals and society, as well as the misunderstandings people often have about insurance. She has over ten years’ experience in the insurance industry, having worked as both a Broker and Underwriter, assisting clients across a broad range of industries. At Insurance Noon, Sarah diligently gathers all the required information and curates up pieces to provide meaningful insurance solutions. Her personal value proposition is to demonstrate a genuine interest in always adding value for clients.Her determined approach to guiding clients has turned her into a platinum adviser to multiple insurers.

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