Finance & Business

What is Supplemental Life Insurance? Is it Worthy for Buying?

What is Supplemental Life Insurance? Is it Worthy for Buying?


Insurance policy has become essential these days to help you pay your medical bills, hospitalization bills, or get free treatment if you are resistant to any illness. It also helps you to protect your family, assets, and yourself from any financial losses. 

Also, various add-on plans help you to get extra coverage in your existing policy only by paying a small amount. In this article, let us look at one such add-on named Supplemental Life Insurance Policy. 

What is Supplemental Life Insurance?

This policy is also known as employer-paid or voluntary life insurance. Supplemental Life Insurance is extra coverage to your existing policy. It is helpful when a current life insurance policy of a person diagnosed with illness doesn’t cover all the expenses or facilities. It expands coverage of the existing policy, and you can buy it from the private insurer or get it from the employer’s policy agent.

What is Supplemental Life Insurance
Image Credit – Canara HSBC

Why Should You Buy A Supplemental Life Insurance Policy?

Employers usually provide a life insurance policy to the employees, which is multiple amounts of their annual salary. But sometimes, this policy doesn’t provide enough coverage if you have a big family or significant financial liabilities. 

In such a situation, you must avail supplemental life insurance policy, as it provides extra coverage and provides you an extra layer of protection.

What Are The Benefits Of A Supplemental Life Insurance Policy?

  • First, you get extra coverage for your family, which the existing life insurance policy doesn’t provide. 
  • You can get additional coverage that covers specific costs such as burial fees.
  • It is a portable life insurance policy, so you can avail of its benefits even if you change the organization.
  • You can even get specific coverage for your spouse, such as this policy which is not included in your current plan.

How Much Supplemental Life Insurance Policy Should You Buy?

If you are not sure how much supplemental life insurance policy you need, kindly ask yourself these questions.

  • How much financial burden would be placed on others after your death?
  • Can your current life insurance policy cover those costs?

Your life insurance policy must be 5 to 20 times more than your annual income. But, this type of insurance policy depends on the costs you have to manage or for which you are responsible?

Some Scenarios in Which You Might Need Additional Coverage

  • You have a child or old parents who are dependent on your income if you are the only earning person in the house.
  • If you have bought a house, and you need to pay the mortgage payments even in the future.
  • You want to protect your spouse from additional costs after your death.
  • If your spouse is not earning anymore and you are the only person earning.
  • If your salary has increased and you need additional coverage to match your new lifestyle.
  • Your child has started going to college, and you need to pay the college fees in the future.

Buying Supplemental Life Insurance Policy From Work

If your employer provides a supplemental life insurance policy, then you can buy it for extra coverage to your existing basic plan. 

Your employer will pay the premiums of the existing plan, which has limited coverage. But when you avail of this type of policy plan with high coverage, you will have to pay the premiums for it.

4 Types Of Supplemental Life Insurance Policy For Employers

1. Supplemental Spouse Life Insurance Policy

It provides coverage to your spouse.

2. Supplemental Employee Life Insurance Policy

It adds coverage to your own policy.

3. Supplemental Child Life Insurance Policy

It provides coverage to the dependents.

4. Supplemental Accidental Death And Dismemberment Life Insurance Policy

It provides coverage to your family if you die or get injured in a severe accident.

Factors To Consider While Buying Supplemental Life Insurance

Before buying any policy, we must always consider various factors to check whether it meets our requirements or not. Therefore there are factors that you can consider before purchasing the supplemental policy.


Pricing of the policy may vary depending on the policy provider and the number of insurers. Also, the pricing depends on various age groups, health conditions, past claims, etc.


Policies that the employers provide usually cannot be carried out when you leave the job. But, some employers offer the facility to carry on the supplemental policy to the next organization. Therefore check whether the policy is portable or not. 

Existing Coverage

Review your existing policy as each insurance provider provides different coverage in the basic plan. Therefore check whether you have coverage for Accidental death, spouse, child, and other dependents.

How Much Does A Supplemental Life Insurance Policy Cost?

If you are purchasing a life insurance policy from your employer, it might cost you more than the policies in the open market. But, again, the cost may vary depending on the employer you are working for. 

Each organization calculates group life policies considering the number of employees in the organization and their age group along with the average age. Therefore the premiums of each company can vary for each age group. 

For example, organization A offers a supplemental premium policy of $500,000 to its employee aged 40 at $600 a year, whereas organization B offers $250,000 coverage at the same price.

Your age can also impact the premium of the same policy. For example, organization A offers supplemental policy coverage of $500,000 to employees aged 30 years for $168 per year. At the same time, the organization may provide the same policy to another employee aged 70 for $6000 a year.

Even if you take the supplemental insurance policy from the open market, then various factors like your age, medical history, type of insurance, coverage needed are considered for calculating the premiums.

Is It Worth Buying A Supplemental Life Insurance Policy?

This policy is most suitable and needed for those whose basic life insurance policy doesn’t provide much coverage. It should also be availed if the existing policy doesn’t offer enough support in case of your accidental death. 

But to avoid spending extra on the policy, kindly review your current plan whether it provides enough coverage or not. Also, if you are opting for a supplemental insurance policy, compare the plans of other insurers to pick the best one for you.


1. Can I Cash Out My Supplemental Life Insurance Policy?

Most employers offer supplemental policy coverage that cannot be cashed later. But some of them might provide a supplemental life insurance policy that can be cashed out or used for loans and as a retirement income.

2. How Much Does The Supplemental Policy Cost?

The premium of this policy depends on the employee’s health, age, and income. The less the age, the lesser premium needs to be paid. 

3. Can The Supplemental Insurance Policy Be Carried To Another Job?

It depends on the employers. Some allow while some don’t allow to carry the supplemental policy to the next organization.


Rachel Hammond

Professional Blogger