What is Supplemental Life Insurance

What is Supplemental Life Insurance

What is Supplemental Life Insurance, and Why Do You Need it?

If you maintain a life insurance policy, income will be provided to your loved ones when you pass away. In America, slightly more than half of adults carry life insurance. This leaves more than 105 million Americans uninsured or underinsured. So, how can you avoid being underinsured? Additional life insurance can help. Known as supplemental life insurance, this added coverage can provide additional benefits for your loved ones when you die. So, what is supplemental life insurance? How does it work? Is it right for you? Read on for answers to these questions. 


What is Supplemental Life Insurance?

As its name implies, supplemental life insurance is coverage you can purchase that goes above and beyond your current life insurance policy. Supplemental life insurance is often available through your employer. Private insurers also offer supplemental life insurance.

For example, your employer may provide a life insurance policy as part of your benefits package. Unfortunately, although these policies are often very low cost or completely free to you, the policy's value is often insufficient, especially if you have several dependents. Consider that a $100,000 life insurance policy offered by your employer would undoubtedly fall short of the needs of your spouse and children upon your death.  

Most experts agree that wage earners need a policy worth at least six times their current salary. Others recommend a policy worth twelve times as much as your salary. That extra coverage will need to be purchased as supplemental life insurance. 


How Supplemental Life Insurance Works

Supplemental life insurance is offered by employers but paid for by employees. During your annual benefits enrollment period, you may elect to purchase additional coverage. The premiums are often deducted from your paycheck. You typically won't need a new medical exam to sign up.  

Should you pass away, your beneficiaries will be entitled to the payout from your employer-sponsored life insurance and supplemental life insurance. What is supplemental life insurance used for? 

  • Ensuring your loved ones have the financial support they need
  • Including specific coverages such as burial and funeral expenses
  • Covering you even when you leave your job
  • Filling in gaps, including supplemental life insurance for a spouse


Where Can I Purchase Supplemental Life Insurance?

You are not limited to your employer's offerings if you need supplemental life insurance. In fact, limiting yourself to life insurance coverage provided by your employer can be risky for several reasons.

  • Your employer may not offer the option to purchase additional life insurance.
  • You may lose your life insurance coverage if you retire or resign.
  • If a health problem develops, you may feel tied to your job if your life insurance is through your employer, as new medical exams may be required to purchase private life insurance.
  • Your employer-sponsored policy may not cover the death of a spouse.

For these reasons, speaking with a financial advisor who provides comprehensive personal financial planning is wise. Independent investment advisors and financial planners can provide you with options for providing for your loved ones that are independent of your employment. Private financial firms are often not limited by which policies they may offer, giving you options from multiple insurers that best fit your overall goals and portfolio. 


Key Points to Remember About Supplemental Life Insurance

  • Supplemental life insurance goes above and beyond your current policy
  • Supplemental life insurance may be necessary to provide for your loved ones
  • Supplemental life insurance may be available from private financial planning firms 


Schedule a Life Insurance Review in Oregon

If you're not sure you need additional life insurance, schedule a review with a reputable financial planner. At Finley Davis, we provide life insurance policy reviews to ensure you understand your coverage. If you are not adequately covered, we can help you identify the best supplemental life insurance policies to meet your needs and goals. To schedule an appointment with Finley Davis, contact us today at 541-342-2224.