Supplemental Life Insurance Plan: What It Is, Common Types & Major Drawbacks

When was the last time you fell ill? A month ago? A year ago? Probably, your doctor recommended some supplements to take alongside your drugs so you can bounce back faster. The same way supplements boost your immune system, that is the same way supplemental life insurance plan boost your life insurance policy.

In this article, you will discover the meaning of a supplemental life insurance plan policy, the common types of coverage options, and the major drawbacks.

What is a Supplemental Life Insurance Plan?

It is a type of life insurance policy commonly offered by employers to employees. It is a part of the benefits or perks of the job you are hired to do.

As an employee, your employer or the company you work for can offer a supplemental life insurance plan to cover you to some extent.

Worthy of mentioning is that a supplemental life insurance plan vs basic life insurance is a bit different. While your life insurance policy protects your life, the supplemental life insurance plan adds additional coverage.

In the latter part of this article, you will find out some of the coverage options of the policy. So, what we are saying is that your employer offers a supplemental life insurance plan that helps you get the most out of your life insurance policy.

Important Points about Supplementary Life Insurance Policy

Depending on where you work, the employer can offer a basic life insurance policy. In most cases, the policy isn’t always enough to cover you and your family. Therefore, it becomes imperative to get additional coverage being the supplemental life insurance plan.

With it, you can add more coverage options to protect you and your loved ones. The interesting thing is that you can purchase the supplemental life insurance plan through your employer.

8 Quick Facts about Supplemental Life Insurance Policy

Congratulations if your employer offers the supplemental life insurance plan. You are one of the few lucky employees who get their lives covered to a considerable extent, thanks to having a good boss.

That aside, you need to learn some facts about using supplemental life insurance coverage. Below are eight (8) facts you need to know before purchasing or accepting the policy from your employer.

1.    You are not the Only One Involved

Supplemental life insurance is also called group life insurance. As the name denotes, it is a type of group life insurance policy that covers the persons added as a group.

If it is offered by your employer, chances are that you and the other employees are covered with it.

2.    No Medical Examinations

Taking a medical examination is one of the criteria for getting a basic life insurance policy. It is, therefore, interesting to see that this isn’t always the case with the supplemental life insurance plan.

The major difference between a supplemental life insurance plan vs life insurance is that the former doesn’t always require a medical examination.

So, even if you have an underlying medical condition, you may be able to get covered.

3.    Supplemental Life Insurance Policy is Job-Dependent

This can turn out to be a disadvantage, especially if you are considering taking your talent elsewhere. Being an insurance policy covered with a single contract and under the employer’s control, the policy is job-dependent.

This means that if you quit your job, the policy goes away. The other employees who are covered with the policy continue to enjoy its coverage, provided that they still work at the same establishment.

4.    Consider It as an Add-On

It is best to consider the supplemental life insurance plan as an add-on. This is especially if you don’t have basic life insurance.

The reason is simple – the extent of the coverage can be lower. For example, your workplace life insurance may only insure you up to a yearly salary’s worth.

This may not fit in all cases, especially when you run a large family or your family’s expenses are on the high side.

For this reason, you want to purchase a basic life insurance policy to insure your life is up to its worth. That way, your loved ones wouldn’t be thrown into financial misfortune if you pass away.

5.    Porting the Coverage is Possible

A supplemental life insurance plan may be job-dependent, but it can be ported. What this means is that you may be able to retain the coverage even when you leave the workplace.

All you have to do is to liaise with the employer and insurance provider to keep paying the premium even if you don’t work there anymore.

6.    The Coverage comes with some perks

Although a supplemental life insurance plan seems like an add-on, it has some additional benefits. For example, you may be able to leverage the waiver of premium to keep the policy active. Your request is granted if you are below the age of 60 and disabled. The waiver of premium means that you get to keep the supplemental life insurance plan active without paying a premium.

7.    Convert from Supplemental Life Insurance to Permanent Life Insurance

Supplemental life insurance policyholders may also be allowed to convert the coverage to permanent life insurance.

The conversion becomes necessary if your employer fails to pay the premium. You may also want to convert to permanent life insurance if the policy’s term is about to end.

8.    Premiums Vary Greatly

The premiums payable for a supplemental life insurance plan vary on a wide range of factors. The extent of the coverage, the expenses, life expectancy, and expected claims of the policyholders are considered.

Common Types of Supplemental Life Insurance Plan

There are two (2) major types of supplemental life insurance plan:

  • Permanent life insurance
  • Term life insurance

For Permanent Life Insurance, the policy continues throughout your lifetime. Its typical policy length is at the death of the policyholder. Permanent life insurance also offers cash value, which can be built over time by higher premiums.

Term Life Insurance is a type of life insurance policy with a temporal basis. The policy’s length ranges between 10 and 30 years. Within this time, the policyholder is entitled to a death benefit payable to the beneficiaries on death. The condition for claiming the death benefit is that the policyholder is up-to-date with paying the premiums before death.

Major Drawback to Getting Supplemental Life Insurance Policy

The supplementary benefits of life insurance include the protection of the policyholder throughout the active work years. However, the policyholder may be unable to enjoy the coverage options if he or she quits the job or retires. The coverage goes away with that because it is meant to be a workplace insurance policy.

Another downside to getting a supplemental life insurance plan is that the coverage options are likely to be lower than expected. Most policies insure the workers only up to a year’s worth of their salary. For someone whose typical life insurance value is $1 million, the coverage isn’t worth it.


What is the purpose of supplemental life insurance when it doesn’t cover every aspect of the policyholder’s needed?

Despite the limited coverage, the policy is ideal for employees who are looking to get additional insurance protection while working. It also helps you save costs on getting a full insurance policy, especially if you can make do with the offered coverage for now.


What is Supplemental Life Insurance Coverage?

A supplemental life insurance plan is an insurance policy you sometimes, get for free from your employee. It is commonly added as one of the employee benefits. You can also purchase supplemental life insurance coverage to supplement your term life or whole life insurance policy.

Is Supplemental Life Insurance Worth It?

A supplemental life insurance policy is worth it because you may not have to answer health questions to qualify for it. Besides, it costs less than a basic life insurance policy and is sometimes, offered as a work benefit by your employer.

When Should You Get Supplemental Life Insurance? You need the supplemental life insurance plan during your active work years. Find out if your employer offers one as an employee benefit.


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