Exactly what is supplemental life insurance? We know that life insurance comes in different forms and policies. Certainly, it can be a little bit confusing, especially when you want to purchase any life coverage policy.
Ultimately, whenever you decide to purchase an insurance policy plan, shop around for quotes first from different companies.
This will help you to get a piece of good knowledge about the different insurance plans from different insurance companies. More so, it will help you to choose the right option that will benefit you now and in the future.
What is Supplemental Life Insurance?
Supplemental life insurance is an extra policy coverage designed to cushion an already existing life insurance.
For instance, an employer may decide to offer an employee a life insurance policy. However, the policy may not cover all that is necessary.
Supplemental life insurance can be bought at work from your employer. But you can equally lose it once you stop working for that employer.
Again, you can purchase this type of life insurance from an insurance company. It’s always cheaper than the individual life insurance coverage and also limited.
Basically, this kind of life insurance can extend to your spouse or child even though the payouts are always low.
How supplemental life insurance works
Now, as an employee with basic coverage, your employer may offer you extra coverage. If you decide to take it, it will be at your own expense. This means that you have to pay for the premiums with your employee benefits or salaries.
So, the good thing about this kind of insurance is that it mostly does not ask you for a medical examination or questions.
Furthermore, not all employers offer this option to their employees. This is why you should get life insurance coverage for yourself because you may work in an organization that does not offer such options.
Where else can I get supplemental life insurance coverage?
To a large extent, this kind of coverage comes from employers. But that does not mean that they are the only ones that can offer the coverage. Ideally, insurance companies sell individual supplemental life coverage too. So, if you have group insurance with other employees from your workplace, you can then use your supplemental coverage to balance out the group coverage from work.
Types of individual life insurance
If you decide to purchase a personal life insurance coverage to cushion the group coverage from work. You can choose from the two options that are always available. Term or permanent life insurance.
Term or temporary life insurance
Now, a term life insurance policy offers temporary coverage just like it is called. This coverage literally lasts between 10 to 30 years only. This coverage offers benefits that your beneficiaries can inherit if you pass away. However, if this policy ends while you are still alive, and later pass away, your beneficiaries get nothing. Term policy is cheaper to purchase and does not have an option of building up cash value.
Permanent life insurance
As the name, this plan is literally permanent so far you keep on paying your premium. This plan is always an upgrade from a term plan because it has an option of cash value build-up which can be used for either loans or payments for premiums.
Also, your beneficiaries will receive the benefits whenever you pass away.
There are typically other kinds of life policies that you can buy as supplemental coverage. These include:
Accidental death and dismemberment coverage
Burial insurance for end-of-life expenses.
Can you buy different types of supplemental life insurance
First and foremost, the amount of supplemental coverage you can buy is dependent on so many things.
Your choice of multiple supplemental coverages first depends on your financial strength. This is because every insurance policy comes with a certain amount of premium that you must pay. So, multiple coverages demands more premium or out of pocket payment.
Again, your family needs may require you purchase more coverage. The determining factor becomes how large your family is or how large you want to increase your family.
Advantages of employer supplemental coverage option
One very interesting benefit you gain from buying supplemental life insurance coverage from your employer is this. It can be very cheaper than buying it personally.
Also, you do not get to worry about the premiums. The premiums are immediately removed or deducted from your salary before it gets to you.
Then again, you do not have to pass through the rigorous process of medical examination or answering medical questions before you can buy it
Disadvantages of employer supplemental coverage
The major disadvantage you can experience with this coverage is the very scarce and limited options that it offers. So, you have to buy more coverage in order to become well protected.
Another unsatisfactory part of this coverage is that once you get fired from work or resigned, the coverage stops existing.
Benefits of personally purchasing a coverage
In this case, you have control over the coverage you pay for. You literally decide what should go under coverage and what should not.
If you purchased permanent coverage, your beneficiaries are bound to get benefits in the event of your passing.
You can even accumulate cash value with your choice of coverage. Buying a personal supplemental coverage gives you the freedom to make a choice from many options. As long as you make the right choice and keep to your premiums, you will get good services from your insurance company.
Disadvantages of personally purchased coverage
- It can be very expensive.
- You have to pay your premiums all by yourself whenever it is due
- You may go through medical examinations and questions before you can buy suitable coverage.
In conclusion, it is beneficial to get an employer’s supplemental coverage. But if you have to look out for yourself, you may want to purchase your coverage personally from reputable insurance companies in the United States and enjoy the freedom of making good coverage choices.
