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What is supplemental life insurance?

James Battiston

You’ve just started working with a new employer. You’re signing the paperwork, opting in and out of programs, and getting buried in learning the ropes of your position.

Among the deluge comes your company’s insurance package. You look it over, and encounter something you’ve never seen before: the option of supplemental life insurance. 

You pause, in the realization there exists no brain file for this option.

What is supplemental life insurance?

Supplemental life insurance coverage adds to your term life insurance policy. If your employer pays for a base life insurance policy, supplementary life insurance is offered at an additional premium deducted from your pay. It generally covers you for a larger amount, or offers coverage for specific costs, like funeral expenses.

Is supplemental life insurance different to term life Insurance?

Yes and no. Supplemental life insurance is added to an existing term life policy. One can’t exist without the other.

Term life insurance can cover any number of things, depending on the policy you have. It can simply increase your coverage amount – your employer’s standard policy might cover three times your salary, and your supplemental insurance covers you for seven times.

Alternatively, supplemental life insurance can cover you for specific costs. Funeral cover, accidental death & dismemberment, and spouse or domestic partner insurance are all common. Either way, supplemental life insurance provides an additional cushion for your dependents upon your passing.

If you don’t currently have term life insurance, or want to see how your policy measures up compared to others out there, take the time to compare life insurance quotes and see what options are available.

Do I need supplemental life insurance?

Whether or not you need supplemental life insurance is very much dependent on your circumstances and preferences.

If you’re young, single, healthy, and have no dependents, your employer’s policy it probably enough, and supplemental life insurance isn’t worth it. If you want additional cover, your youth may mean a private policy is better value for money.

If you’re married or have a family, are getting older or are generally more worried about your health, supplemental life insurance could be worth it. Your employer may get a group rate, meaning supplemental life insurance rates could be lower than comparable private life insurance.

Another benefit of supplemental life insurance is that, like all employer provided insurance, no medical exam is required. In this way, supplemental insurance is a kind of guaranteed life insurance, which is a good option if you’re worried about your insurability.

Before opting in to supplemental life insurance, check your current private life insurance policy, and take a close look at your employer’s default policy. If it offers enough coverage for your dependents, you’re good to go. If you worry your current coverage won’t be enough for, consider the supplemental life insurance.

Portability of supplementary life insurance 

An important point to consider about any employer-based insurance is portability. This refers to whether you can continue your policy if you change employers. Generally, most employer paid policies are not portable, as they’re based on group rates.

Many private term or whole life insurance policies offer more value when they’re held long term, so you may be better off purchasing life insurance privately if you expect to change employers in the short or medium term.

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How much does supplemental life insurance cost?

As with all life insurance, supplemental life insurance rates depend on factors like your age and health condition. That said, supplemental life insurance provided through your employer is often inexpensive, and has the added benefit of being able to be deducted directly from your paycheque.

Because group life insurance policies are often cheaper, if the supplemental life insurance is covered by such a plan, then you could get the extra coverage you need at a great rate. If, however, the supplemental policy is on an individual basis, it could be cheaper to shop around with private providers for such coverage.

The bottom line

So it supplemental life insurance worth it? It depends. Supplemental life insurance can be an affordable, effective way to have the additional peace of mind, should anything happen to you. It can be a great assurance to have things such as funeral expenses covered for your family, or can provide the additional cushion they require in the event of your passing.

To determine if supplemental life insurance is right for you, take a look at your existing coverage and consider your and your family’s needs. If you find you could benefit from additional coverage, your company’s supplemental life insurance coverage could be what you’re looking for.

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