Supplemental spouse life insurance provides coverage to your spouse as an add-on to your existing life insurance policy.
Life insurance is an important consideration for many families when planning for the future. However, not everyone is aware of the benefits of supplemental spouse life insurance. This type of insurance can provide additional coverage and peace of mind for couples who want to ensure that their loved ones are taken care of financially in the event of an unexpected tragedy.
Several supplemental spouse life insurance policies are available, each with its benefits and drawbacks. Some policies offer a fixed death benefit, while others provide coverage based on a percentage of the primary policy’s benefit. Some policies may offer riders or options allowing additional coverage for children or grandchildren.
In this article, we’ll dive into supplemental spouse life insurance details, how it works, and why it might be a wise investment for your family’s future. And the best part? You can get all of this coverage for under $200 a month. So read on to get into the details of this insurance and how a spouse can be attached to the policy.
What does Supplemental Life Insurance mean?
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
Many insurance policies are given to workers under the employer’s insurance program, where the employer covers the cost of coverage. So if employees need coverage, they can tap into the employer’s program they’re covered under and get insurance.
In such a case, if employees feel they need additional coverage to the existing policy, they can ask the employer for supplemental life insurance- these are low coverage amounts and often free of cost.
You can also look for supplemental life insurance by applying privately- go to the insurance company and tell them you need additional coverage for yourself or anyone attached to the policy. They will give you a suitable plan with a proper coverage amount and lower premiums.
Types of Supplemental Life Insurance
Here are the most common supplemental life insurance options people like to add to 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 a coma for more than 30 days due to an accident caused at work, is paralyzed, or has suffered the loss of speech or hearing as a result of a workplace incident, accidental death, and personal loss insurance provides coverage by giving a fixed monthly amount to the While deciding the policy, the amount is fixed and given to the beneficiaries monthly.
- Spousal/Domestic Partner Insurance: Just like an add-on to your existing life insurance policy, 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 the 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 you can get ahead of unfortunate circumstances.
What is Spouse/Domestic Partner Life Insurance?
Purchasing supplemental life insurance for your spouse or domestic partner is doable; sometimes, you can 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, supplemental spouse life insurance will cover your spouse as well.
Experts say it is better to go for private supplemental life insurance because of portability. The policy will remain in force as long as the premiums are being paid. Usually, when an employee is covered under their employer’s plan, the policy lapses when they change jobs. So if the spouse wants to avoid this risk, opting for a privately managed plan is probably the best option.
Voluntary Spouse Life Insurance
Usually, the coverage amount for supplemental spouse life insurance is 50% less than the originally insured person.
Your dependent’s benefit amount cannot exceed 100% of your benefit amount. For example, if your salary is $30,000 and you elect one-half times your salary in voluntary term life for yourself, you must elect $15,000 or less for your spouse.
Here is a breakdown of premiums according to the age of the spouse/domestic partner.
$1,000 of coverage
|70 and over||$0.5250|
What is Supplemental Child Life Insurance?
Supplemental child life insurance provides financial protection if a child dies. This coverage can be used for burial, funeral, and other expenses.
This additional coverage is also given to plans and existing policies, but buying coverage for children isn’t always advisable. However, people still find this option feasible because as the child grows older, premium costs also grow higher.
Can I Buy Supplemental Life Insurance Through Work?
Yes, buying supplemental life insurance through your employer is often possible. This is sometimes referred to as voluntary or optional life insurance. Employers often provide supplemental life insurance as an elective benefit, allowing employees to acquire more coverage than what is available through a group life policy.
Generally, this type of coverage can only be obtained during an employer’s annual benefits enrollment period or in the event of a significant life event, such as marriage or childbirth. Supplement life insurance is offered in two ways:
- Term life insurance: It is also known as temporary life insurance, which is a type of coverage that remains effective for a specified duration, usually between one to thirty years.
- Permanent life insurance: It offers lifelong protection, adjustable or guaranteed premiums depending on the policy type, and includes a cash value component. However, premiums for permanent insurance are often higher than term policies.
Supplemental life insurance can also be provided in the form of an add-on or rider to your group life policy. These additional benefits may include:
- Higher death benefits
- Coverage for your family
- Burial insurance, or accidental death
- Dismemberment (AD&D) protection.
Specifically, these riders may offer the opportunity to increase your policy limit by a multiple of your annual salary or a set dollar amount, provide coverage for your spouse, domestic partner, or child, and offer compensation for end-of-life expenses or in the event of accidental death or dismemberment.
How do employer-sponsored plans work?
Employer-sponsored supplemental life insurance plans typically work by allowing employees to purchase additional coverage beyond what is provided by the employer’s standard benefits package.
Employees can enroll in supplemental life insurance coverage during the employer’s annual benefits enrollment period or after a qualifying life event, such as marriage or childbirth. Generally, employees can choose from a range of coverage amounts and premium levels, with the cost of the coverage dependent on factors such as age, health, and the amount of coverage selected.
Premiums for supplemental life insurance coverage are typically paid by the employee through payroll deductions, although in some cases, the employer may contribute to the cost of the coverage. The coverage is generally portable, meaning that if the employee leaves the company, they may be able to continue the coverage by converting it to an individual policy.
It’s essential for employees to carefully review the terms and conditions of their employer’s supplemental life insurance plan, including any restrictions on coverage and limitations on benefit payouts. By understanding the plan’s details, employees can make informed decisions about whether to enroll in supplemental life insurance coverage and how much coverage to purchase.
|The employer subsidizes the premiums, making insurance affordable (or free, in some cases)||Typically, group life insurance policies have limited coverage levels, which may not provide enough security for some individuals.|
|The majority of group life insurance policies don’t demand a medical examination.||You might not be able to keep your insurance if you quit the company.|
|Your eligibility for employer-sponsored insurance is frequently guaranteed, so your past medical history won’t be a factor.||Employer-sponsored policies frequently do not include riders that can be used to tailor your coverage.|
What Are The Key Factors To Consider Before Buying Supplemental Life Insurance?
Just because supplemental insurance is readily available does not mean you should go and mindlessly buy it. There are several key factors to consider before purchasing supplemental life insurance:
- Coverage Amount: Consider the coverage you need based on your financial responsibilities, such as mortgage payments, children’s education, and other outstanding debts.
- Premiums: Determine how much you can afford to pay in premiums each month or year, as the cost of supplemental life insurance can vary depending on factors such as age, health, and the amount of coverage selected.
- Health: Some supplemental life insurance plans require a medical exam or health questionnaire, so it’s important to be aware of any pre-existing health conditions that may affect your ability to obtain coverage or the cost of premiums.
- Employer Plan: Review the terms and conditions of your employer’s standard benefits package to see if it already includes life insurance coverage and how much coverage is provided. This can help you determine if additional supplemental coverage is necessary.
- Policy Term: Consider the length of time you need the coverage to last. If you only need coverage for a specific period, such as until your mortgage is paid off or your children are grown, a term life insurance policy may be more appropriate.
- Riders and Add-Ons: Be aware of any optional riders or add-ons that may be available with the supplemental life insurance plan, such as coverage for accidental death and dismemberment, and evaluate if they are necessary for your specific situation.
Considering these factors and reviewing the supplemental life insurance plan details, you can decide whether to enroll in supplemental coverage and how much to purchase.
Is Supplemental Life Insurance Worth It?
Now that you know what it is and how it works, the next step is determining whether it is worth the cost. There is no direct answer to this question because it depends on several factors, such as the current amount of coverage, why you need additional coverage, whether you have guaranteed expenses planned in the future, etc.
The cost factor is one major reason people opt for or drop this option.
This table gives an overview of the cost of each supplemental life insurance plan coverage amount.
|Coverage Option||Coverage Amount||2020 Monthly Rate|
|$5,000 per child||$1.02|
|$10,000 per child||$1.94|
|$20,000 per child||$3.69|
|Spouse/partner and dependent
|$10,000 spouse/partner; $5,000 per child||$4.51|
|$20,000 spouse/partner; $10,000 per child||$8.60|
|$40,000 spouse/partner; $20,000 per child||$16.40|
Note: Sample rates have been extracted online, courtesy of Iowa University.
Should I purchase extra life insurance through my employer?
Only after assessing the fact that most supplemental plans are not portable, the premium costs, and the price of a supplemental policy on the open market.
Is purchasing life insurance through my workplace less expensive?
Term life insurance bought on the free market is typically less expensive than insurance obtained via an employer. It pays to compare options before choosing and making a decision.
Is it possible to borrow against additional life insurance?
No supplemental insurance does not accumulate cash value, so no money is available for borrowing.
Can my supplemental life insurance be cashed out?
The majority of employee supplemental life insurance policies provide term insurance, which has no cash value and cannot be redeemed later. However, some businesses offer supplemental permanent life insurance that is optional and that accrues tax-deferred cash value that can be withdrawn or lent against, for example, to supplement retirement income.
How are payouts made under supplemental life insurance?
When the insured passes away, the insurance company sends a cheque to the beneficiary or the decedent’s beneficiaries.
Supplemental life insurance is an additional type of coverage you may want for your spouse/domestic partner or 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 much 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 the employer himself covers it. 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.