Should I Get Supplemental Life Insurance?

    Is Getting Insurance From Work Worth It?

    Certain workplaces offer you group life insurance as part of your employee benefits package. These life insurance policies can protect you and your family just like a private term life insurance policy would. However, group term life insurance through your employer has several limitations. 

    To strengthen your insurance protection, some employers offer supplemental life insurance. This adds to your basic insurance protection to cover things that your initial policy may not cover. In this guide, we’ll cover everything you need to know about supplemental life insurance – what it covers, why you should buy it, as well as other alternatives that you can pursue when building your life insurance plan. 

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    What Is Supplemental Life Insurance?

    As the name implies, supplemental life insurance is a policy that is purchased as a complement to an existing employee benefit. These life policies are offered by employers as an addition to the basic group life insurance policy provided to employees when they start their new job. The term life insurance policy offered to an employee is usually worth one to two times their annual salary.

    Generally, employees buy supplemental insurance to increase their group insurance benefit amount. Because most workplace insurance offers limited death benefits, supplemental life insurance can be an appealing option for an employee to improve their protection. Sometimes these policies also provide employees extra protection that their basic policy doesn’t cover.

    Because they’re typically offered through your employer, supplemental life insurance policies may be non-portable. This means that when the policyholder leaves the company, their supplemental life insurance protection may be rendered invalid.

    What Supplemental Life Insurance Covers 

    Supplemental life insurance is usually bought to add protection to your employer-sponsored group life insurance. Here are the most common things that they cover.

    Accidental Death And Dismemberment

    Accidental death and dismemberment (AD&D) supplemental policy will pay out if you die as a result of an accident. An AD&D policy’s protection overlaps with your basic protection, which means if you die because of an accident, your family will receive extra death benefits.

    In addition to death by accident, these policies also provide partial coverage if you suffer non-lethal dismemberments – usually, the benefit that you receive will increase along with the severity. 

    Because what constitutes an accident may be different between insurers, it’s important to understand the terms of your accidental death policy.

    Burial Expenses

    Supplemental insurance can help pay your funeral expenses. Usually, the benefit amount offered by these supplemental policies is smaller compared to other insurance types. Despite that, supplemental burial coverage is still useful to pay your funeral costs without having to spend your main death benefit.

    Spouse & Child Protection

    You can also use your supplemental insurance to protect your dependents. If you purchase supplemental protection for your loved ones, you’ll receive a death benefit in the event of their death. Generally, the coverage amount offered to your dependents is smaller than your own coverage.

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    Reasons To Purchase Supplemental Life Insurance 

    Wondering why you might need a supplemental life insurance policy? We’ll cover several key reasons why in this section.

    Receive Additional Life Insurance Coverage

    By applying for supplemental insurance, you’ll be eligible for additional coverage. Since employer-sponsored group life insurance may have a limited benefit amount, you may be able to strengthen your protection through supplemental coverage. This is even more important if you have a family to support, because, in your absence, the basic death benefit amount may not be enough to keep them financially stable.

    Enjoy More Competitive Premiums

    Usually, a supplemental policy that your employer offers has more relaxed qualification requirements. Instead of going through a medical exam or the usual underwriting process, your prices are determined by age group. This allows you to receive better rates even if you’re considered unhealthy by the standards of your age group. 

    Cover A Specific Need For Protection

    Your main insurance policy is almost always a life policy. While it’s versatile and comes in handy for most situations, you may need to seek other forms of protection to cover more specific risks. That’s where a supplemental life policy can help you.

    For example, if your job has a high risk of workplace accidents, you may benefit from buying supplemental AD&D protection from your employer. Or if you’d like to pay for your funeral without eating away at your main death benefit, you can opt for supplemental burial insurance.

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    Key Considerations Before Buying Supplemental Life Insurance 

    In this section, we’ll discuss several things that you should think about before applying for supplemental insurance.

    Your Risk Profile

    The riskier you are to insure, the less likely you are to receive favorable life insurance premiums. If you find it tough to receive affordable premiums on your own, then supplemental life insurance from your employer might be the better option. 

    Because companies sometimes subsidize your premiums, buying supplemental insurance from your employer could be cheaper. However, if you’re younger and healthier, you may be less risky to insure. This usually allows you to receive lower premiums, making it easier to shop for private insurance.

    Your Protection Needs

    Depending on your personal circumstances, you may need more protection beyond your basic life coverage. More specific insurance needs like accident protection or spousal life insurance coverage can be fulfilled by supplemental life insurance. 

    The Policy’s Portability

    One important thing to consider when getting insured through your employer is its portability. Depending on the company, your policy may be portable or non-portable. If you leave the company, portable policies retain their protection while non-portable policies will be rendered invalid.

    Market Availability Of Similar Policies

    The right policy doesn’t just protect you, it protects you at a great value. Supplemental insurance policies offered by your employer may be cheaper compared to a standalone policy, but the coverage they offer is usually limited. 

    When you need extra protection on top of your term life insurance, it may be a good idea to research rates for standalone policies on the open market. This allows you to compare the benefits and premiums between the standalone policy and the supplemental one offered by your employer.

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    Alternatives To Supplemental Life Insurance 

    Sometimes, supplemental life protection may not be enough. In this section, we’ll present two alternatives that you can look into as additions to your existing coverage.

    Private Insurance Policies

    If you’re seeking more coverage to add to your existing term life insurance, standalone policies from private insurance companies can be an alternative. Private insurers provide policies for specific coverage needs like AD&D and spouse insurance. Compared to supplemental policies through your employer, these policies usually offer better value and aren’t tied to your company.

    However, your insurability will play a larger part in determining your rates. If you’re young and healthy, you stand to gain better rates. If you’re older and are suffering from health issues, you may find it harder to qualify for a private policy.

    Life Insurance Riders

    Depending on your insurance company, you can also add riders to your existing coverage. These are extra options for coverage that fulfills needs such as funding your long-term care or as a parent, providing insurance for your child. Usually, these riders are offered in exchange for an increase in premiums.


    Buying supplemental life insurance from your employer could be a convenient method to strengthen your insurance coverage. However, it’s important to research other options to make sure that you’re getting the best value when you buy supplemental protection. Depending on your risk profile, private insurance may be a better value for your money.

    If you’re still thinking over an offer for supplemental life insurance, Wesley Insurance, LLC is here to help! Our team of experts can advise you on finding the best life insurance that suits your needs. Contact us today for more information! 

    Written By Cameron McDowell
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