What Is Supplemental Life Insurance?

Updated · Mar 06, 2023

Supplemental life insurance is extra coverage or benefits you can add to your current policy.

You can get it through your employer or from a private company.

Below, we examine the different options you can choose from.

We also compare the pros and cons of buying supplemental coverage through your employer vs. a private company.

Read on to find the option that best fits your needs.

What Is Supplemental Life Insurance?

The meaning of supplemental life insurance is to add more coverage or extra benefits to your existing policy.

You can use it to cover expenses that your primary policy doesn't include, such as funeral costs.

Or, there might be a change in your life, such as marriage or a new child. In that case, you might need to get supplemental coverage for your spouse or child.

Do I Need Supplemental Life Insurance?

How to determine whether you need supplemental coverage?

Before we start, let’s answer this question:

What does supplemental insurance mean?

It means an addition to your main policy.

First, think about your goals.

Does your current life insurance policy cover all of them—end-of-life expenses, debts, your children’s education?

If the answer is no, supplemental coverage may be a good idea.

Just make sure you choose the right option, based on the goals, the future financial need you want to cover.

Second, consider your financial situation.

Getting more coverage will increase your premiums.

Can you afford to pay them?

Sit down and assess your budget carefully before you decide.

Once you’ve made sure it makes sense for you financially, shop around for the best rates.

Should you get life insurance through work?

Or do you need to find an offer from a private provider?

Let’s examine each of these options more carefully.

Employer-Sponsored Life Insurance

Many companies provide some type of life insurance as part of a benefits package.

Usually, they offer their employees a free basic plan and a few paid voluntary life insurance options.

Basic Life Insurance

Many companies offer basic coverage to their employees for free.

Commonly, it is a term or whole life policy with a rather small death benefit.

If something happens to you while you are employed by the company, the insurance provider will pay the beneficiaries.

Supplemental Life Insurance

Supplemental employee life insurance is extra coverage or other benefits you can add to your basic insurance.

Of course, that’ll cost you more.

Typically, employee supplemental life policy options are limited.

You will probably have a choice between:

  • AD&D or burial insurance
  • Certain riders
  • Additional coverage
  • Insurance for your spouse or children

Check with your company what it offers and at what price.

Then compare that to the private market options.

Pros and Cons of Employee-Sponsored Life Insurance

Employer-sponsored policies are usually more affordable than individual insurance.

Plus, they usually don’t require a medical exam, so it’s much easier to qualify.

Still, voluntary life coverage is more limited than individual insurance. Both the types of policy you can choose from and the coverage you can get without a medical exam are limited.

Arguably, the main drawback is that you may lose your coverage if you leave the company.

To prevent or prepare for such eventuality, check whether the supplemental life insurance through your employer is portable.

Supplemental Insurance Through a Private Company

There are a variety of supplemental policies available through private companies.

And they offer a greater variety of options:

  • Supplemental child life insurance
  • Additional coverage for your current policy
  • Final expense life insurance
  • AD&D (accidental death and dismemberment) coverage
  • Disability insurance
  • Supplemental spouse life insurance

The prices may vary greatly by provider.

So, compare the offers of several companies and select the one that best meets your needs and budget.

Pros and Cons

The biggest benefit of buying supplemental life coverage through a private company is the wide range of options you can choose from.

That said, they are more expensive than group insurance. Still, if you shop around a bit, you will likely find cheap individual plans as well.

Another obstacle is that it is more difficult to get approved for coverage through a private provider.

If you have certain pre-existing medical conditions, employer-sponsored insurance may be the only option for you.

Wrap Up

If your current insurance plan doesn’t have everything you need, you can purchase supplemental coverage.

To choose the most suitable option, you need to know what supplemental life insurance is and where to buy it.

Should you purchase it through your employer or shop around for the best rates on the private market?

Find the pros and cons of each option in our detailed guide above.

Aleksandra Yosifova
Aleksandra Yosifova

With an eye for research, Aleksandra is determined to always get to the bottom of things. If there’s a glitch in the system, she’ll find it and make sure you know about it.