Does Supplemental Life Insurance Make Sense for you?

Supplemental life insurance, also known as voluntary life insurance, adds extra coverage and financial protection at an affordable price.

Written by Sarah Archambault / June 7, 2022

Quick Bites

  • Supplemental life insurance provides extra coverage on top of your existing life insurance policy.
  • It’s typically an affordable option, especially when you buy it through work or a membership organization. It often doesn’t require a medical exam.
  • If you leave your job or the organization where you purchased the policy, you may lose your coverage.

Supplemental life insurance is a policy you can purchase in addition to your existing life insurance policy. It is designed to give you extra peace of mind that your family will be taken care of when you die.

Inside this article

  1. What is it?
  2. What to know
  3. Does it make sense for you?
  4. More on supplemental life

What is supplemental life insurance?

Many people have basic life insurance, either through their employer or on their own. If you want more coverage, you might consider supplemental life insurance.

Sometimes called voluntary life insurance, these kinds of policies give you extra coverage.[1]

“Supplemental insurance is generally offered through an employer’s group plan, and it may come with features not available through traditional insurance providers,” says David Radoccia, managing director of Pensionmark Meridien, a Providence, R.I.-based insurance and wealth management firm. Some policies “that do not require full underwriting or may have limited questions which may be easier to qualify for–especially if an insured has pre-existing conditions which may cause them to be uninsurable.”

What you need to know about supplemental life insurance

If you’re considering getting a supplemental life insurance policy, here are a few other things you need to know:

Offers affordable extra coverage

Supplemental life insurance is generally less expensive than basic life insurance since it’s likely you’ll be able to take advantage of a group rate, or group discount, through your employer or a membership group like a union or professional organization.[2,3]

Medical exam may not be required

Unlike standard life insurance policies, there’s a good chance you won’t need a medical exam to qualify for supplemental life insurance. Because of this, your medical history likely won’t affect your rates.

You’ll lose coverage if you leave your job

Supplemental life insurance typically isn’t portable. This means that if you leave your job, there’s a good chance you won’t be able to take your supplemental life insurance policy with you when you go.

Multiple coverage options

You can choose from term or permanent supplemental coverage. With term life insurance, you’ll buy your policy for a set amount of time, or term, and it expires once the term is up. Permanent coverage lasts for life, as long as you pay your premiums, but tends to be the more expensive option.

Coverage may be available for your family

If you have a spouse and/or child, you may be able to buy them their own supplemental life insurance policy, and take advantage of the same group discount that’s available to you. You’ll want to check with your employer because you may need to buy a supplement policy for yourself first in order to qualify.

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Does supplemental life insurance make sense for you?

It’s generally considered a good rule of thumb to have a life insurance policy that’s equal to at least seven to 10 times your income. Most basic life insurance offered through work is free or has a very low premium, though the associated death benefits can be low, starting at around $25,000. [3]

Some policies may provide death benefits that equal one to two times your annual salary, but it may not be enough for your beneficiaries. This is where supplemental life insurance can provide the extra protection your family needs and give you peace of mind.

Before deciding if you need supplemental life insurance, you’ll want to think about who depends on your income and for how long. If your basic policy isn’t big enough to stretch across all of your family’s future expenses, you may need to add a supplemental life insurance policy.

Here are some things to think about when deciding:

  • Number of dependents: How many people depend on you financially? Do you have a spouse? Children? Or even an aging parent that you care for? You’ll want to consider all the people that rely on your income and what may happen when you die.

  • Financial needs: Think about the types of things that you’re paying for now and may need to cover in the future. From a mortgage to college tuition and your spouse’s retirement, how much money will be needed to take care of those expenses?

  • Length of coverage needed: If you were to die while you’re covered, your family would get a one-time death benefit. But will that be enough to replace your income for the next three years? Ten? Twenty?

Other things to think about with supplemental life insurance

While supplemental life insurance can offer you extra peace of mind and financial protection for your family, it’s not the only way. If you just need a small bump up in coverage, you may be able to add a rider, covering accidental death, for example, to your existing policy.

Take a good look at your situation before making any decisions and reach out to a professional if you need further support.

Article Sources
  1. “What is Supplemental Life Insurance?” Prudential. https://www.prudential.com/financial-education/what-is-supplemental-life-insurance
  2. “Supplemental life insurance: Should you consider buying it?” Guardian. https://www.guardianlife.com/life-insurance/supplemental
  3. “What is supplemental life insurance?” Progressive. https://www.progressive.com/answers/supplemental-life-insurance/

About the Author

Sarah Archambault

Sarah Archambault

Sarah is a personal finance writer with a passion for providing real world money advice. She loves learning new ways to save and spend money wisely and help others figure out how to make smarter financial decisions. She’s created and edited content for the likes of Credit Karma and Experian along with insurance companies, banks and other financial institutions.

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