Many people assume that the life insurance they have applied for, or the one that their employer has offered, is sufficient to cover all of their family needs. However, let us break it down to you that this is not true; in fact, if something were to happen to you, the most this insurance could cover would be burial costs, help your spouse pay off their mortgage, or can be sufficient enough to be kept for your child's education if you have one.

However, the question is, where would your family bring in the money for the other expenses? Hence, ensuring that you get 'supplemental life insurance' on top of your already existing insurance is essential. Want to know more about this type of insurance? We have you covered.

What is Supplemental Life Insurance?

Supplemental life insurance – also called voluntary life insurance – is a perk that many companies give out as employee benefits packages. It is a group life insurance that allows employees to add extra coverage to their already existing life insurance policies at a group rate.

These life insurance policies generally cost less than individual insurance, and to purchase it, you will not have to answer many of the health questions to qualify for the coverage or how much you should pay for the premium. However, while acquiring this policy is easy, there is a high chance that you can lose the coverage if you leave your job or are fired from it.

Supplemental life insurance is a significant aspect to pick on top of your already existing insurance. This is because it provides financial security, and that too at a lesser price. If you are someone who wants to know how this form of life insurance works, then we have this aspect concluded for you, too.

How Does the Supplemental Life Insurance Work?

Through the supplemental life insurance policies, the employer or the association that provides it can decide how much free coverage the employees of the company or members of the association will get. The set amount is usually multiples of the salary they are paid.

For example, some employees might get coverage for a year's worth of salary for free. Then, these same employees can sign up to save five times their salary in the supplemental life insurance.

However, the question is when you should sign up or how the overall process will work. Well, any employee who wants to avail of the supplemental life insurance can sign up for it during the annual benefits enrollment period – or when they go through experience or transition into a new life event like getting married, having a baby, etc. The supplemental life insurance will not require you to go through a medical examination, and you will also not have to answer any health-related questions to verify yourself as credible for the insurance.

Types of Supplemental Life Insurance

Supplemental life insurance is a general term; however, it also has several types. Based on what your employer offers, you may come across the following types of supplemental life insurance:

Term Life Insurance

The term life insurance refers to coverage with rates that are offered for only a set period. For example, if your term insurance is set for 1-25 years and you pass away during your set term, then your beneficiaries would receive your death benefits as it was agreed upon at the time of the insurance.

However, if you surpass the set twenty-five-period mark and are still alive, your term will expire, and so will your set rate. At this point, the insurer would have to renew their policy, but they would receive a higher rate than they paid before. The majority of supplemental life insurance operates on the term life insurance stance.

Permanent Life Insurance

While term life insurance is pretty standard, permanent life insurance falls on the opposite tangent. This life insurance works as a whole life insurance or universal life insurance and is only offered by a few insurance groups.

These policies come with a cash value component. This cash-value life insurance earns interest or other investment gains and grows tax-deferred. Any employer can tap into the policy cash value while you are still alive through a loan withdrawal, or you may also be able to surrender the policy.

Coverage for your Family

This sub-type of supplemental life insurance provides an extended coverage benefit to your family, like a spouse, domestic partner, or child. However, the death benefits that your family might receive are much lower than the ones that you would receive.

Burial Insurance

The burial insurance quickly gives off the meaning of what this term actually provides. However, to still give you an insight, this form of insurance is designed to cover end-of-life expenses, which can help your family prevent paying any medical bills or funeral costs in case of your death.

Accidental Death and Dismemberment

Accidental death and dismemberment is a life insurance policy that provides compensation or reimbursement if the insured employee is severely injured or passes away. It is slightly similar to burial insurance. However, it covers slightly different factors from the other insurance mentioned above.

Wrapping Up!

Supplemental life insurance is not separate coverage and will work best only as an additional coverage to your already existing individual coverage. If you are someone who was recommended to get supplemental life insurance coverage and you want to gain more insight into it, then we hope this article was helpful for you. Let us know whether you have made up your mind about getting this form of insurance or not.