Jeffrey Manola is an experienced life insurance agent and the founder of Top Quote Life Insurance. His mission when he created Top Quote Life Insurance was to provide online consumers searching for life insurance with the absolute best quotes for term life insurance, permanent life insurance, no medical exam life insurance, and burial insurance. Not only does he strive to provide you with the ...

Full Bio →

Written by

Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insur...

Full Bio →

Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Nov 4, 2020

Advertiser Disclosure

It’s all about you. We want to help you make the right life insurance coverage choices.

Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance provider and cannot guarantee quotes from any single provider.

Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.

Here’s a sobering statistic: 85% of consumers agree that most people need life insurance, yet only 62% of consumers actually have life insurance.

What’s even more sobering is the fact that the life insurance they have may not be enough.

That’s where supplemental life insurance comes in. Keep reading to find out what it is, what it covers, and when you should invest in it.

Looking to compare life insurance policies? We can help. Enter your ZIP code to get free quotes from multiple insurers.

What is Supplemental Life Insurance?

First things first: what is supplemental insurance?

Supplemental insurance has a couple of different meanings depending on the insurance coverage being referenced. For example, there is supplemental insurance that works in combination with health insurance coverage. There is also supplemental insurance that works in combination with employer-provided coverage plans.

The common factor, regardless of the insurance coverage being referenced is that a supplemental insurance policy is simply an additional form of insurance coverage that is meant to complement any primary insurance coverage you currently have.

For the purpose of this article, we will be speaking in terms of supplemental insurance that would work in combination with existing life insurance coverage.

Why Might you Need Supplemental Life Insurance Coverage?

Life is just simply unpredictable and with that can bring on changing insurance needs. Because life is so unpredictable it can be difficult to pinpoint an exact amount of life insurance coverage that will be able to fulfill all your insurance needs.

For example, let’s say you purchased a 30-year term life insurance policy 10 years ago. You are now 10 years into your contract and during that time you have purchased a new home and had a baby. These two life-changing events could very well have changed your insurance needs when compared to your life at the time you originally purchased your life insurance policy.

Because of this, we have the option to fulfill those changing insurance needs with supplemental life insurance.

Have you experienced any of the following since you purchased your life insurance?

  • Had a change in annual income
  • Purchased a new home
  • Marriage / Divorce
  • Birth of a child
  • Acquired new debts
  • Lost a loved one

Anyone of the above can have an effect on a current life insurance policy that may require not only a life insurance review but the need for a supplemental life insurance policy.

Your one-stop online guide for life insurance quotes. Get free quotes now!

 Secured with SHA-256 Encryption

Types of Supplemental Life Insurance Coverage

Like any insurance policy, not all supplemental life insurance policies are created equal. In fact, not all are even actual life insurance policies.

Outside of actual life insurance coverage, several of these supplemental insurance options are meant to complement any life insurance coverage you already have. These coverage options are generally designed to use for specific circumstances, like funeral costs, long term care costs or medical costs associated with certain diseases.

Let’s break down the different types of supplemental life insurance coverage.

The following types of supplemental insurance coverage options can be considered as actual life insurance policies. This means that a death benefit will be paid out to a designated beneficiary should the insured pass away while the insurance coverage is in an active state. The following supplemental life insurance coverage options should be considered if you need additional death benefit protection to cover life-changing events.

Term, Universal and Whole Life Insurance

These are the most common and most beneficial forms of supplemental life insurance coverage. Term insurance is the most affordable of all the available life insurance options. It can provide additional death benefit protection in fixed premium contract lengths of 10, 15, 20, 25, or 30 years.

Universal and whole life insurance coverage are two forms of permanent life insurance coverage. Although these two options can provide a lifetime of permanent life insurance coverage, they are different in many ways. These differences mostly stem from the flexibility the coverage allows the insured.

Universal life insurance allows for adjustments to be made within the death benefits as well as premium payments. It also has the ability to accumulate cash growth within the policy’s cash value account. Any potential cash growth is based on an interest rate declared by the insurance company.

Whole life insurance is the most expensive of all available life insurance options. However, the life insurance coverage has a fixed premium that is guaranteed to last as long as you live. It also offers a guaranteed cash value growth, along with a guaranteed death benefit. One of the most attractive features of any whole life insurance policy is the potential dividends the insurance policy can earn.

Burial Life Insurance

As the name implies, this type of supplemental life insurance is specifically designed to cover the costs associated with funeral costs. Burial insurance coverage is also commonly referred to as Final Expense or Funeral Insurance.

Typically, burial insurance policies are smaller whole life insurance policies that can range from $2,000 up to $50,000 of death benefit coverage. These are known as non-participating whole life insurance policy’s as they cannot earn dividends.

However, they do offer both a fixed premium as well as guaranteed cash value growth. Best of all, these policies are designed with seniors in mind. This is mostly because they do not require a medical exam to apply, are lenient towards medical issues, and offer an easy application process.

Burial life insurance coverage is a great alternative to covering potential funeral costs however there are a couple of things to be aware of. These types of plans offer a couple of variations on how the death benefit works.

These variations include level, modified, or graded. A level of death benefit means that the full death benefit will be paid out starting from the first-day coverage is active.

Modified generally means that a percentage of the full death benefit will only be paid out if death occurs before you have reached year two of having the policy.

Graded means that the only benefit that will be paid out is 100% of all premiums paid plus 10% if death occurs prior to policy year two. After policy year two, the full death benefit will be paid out.

Mortgage Life Insurance

This type of supplemental life insurance is designed with strict intentions to pay off the remainder of your mortgage in the event of your death. The purpose of this is to allow your family to be able to stay mortgage-free and maximize the funds available from the primary life insurance policy.

Most mortgage life insurance policies are a form of term life insurance. The death benefit usually contains a provision in which the death benefit will decline as the remaining sum on your mortgage goes down.

When considering mortgage life insurance you have to be careful and really read the fine print. There are companies out there that will offer this coverage in which over time your death benefit decreases, but your premium remains the same or even worse, increases.

Also, be aware Private Mortgage Insurance or Mortgage Insurance Protection as these types of coverage options can pay the mortgage balance to the lender and not your family. It’s often a much better option to have the death benefit go to your family rather than the lender directly.

Our Recommendation on Mortgage Life Insurance

Instead of purchasing an actual mortgage life insurance policy, consider a traditional term life insurance policy with the intention of the death benefit to be used towards mortgage payments or payoff of the balance.

In most cases purchasing a traditional term life insurance policy will be cheaper than a mortgage life insurance policy. It also can provide peace of mind knowing that your death benefit is going to your loved ones rather than the lender’s pocket.

Protective Life Insurance Company offers an excellent life insurance policy called Custom Choice Term UL that works well for traditional life insurance coverage, as well as a great mortgage life insurance solution.

The reason for this is that Custom Choice Term UL provides life insurance coverage anywhere from 10-30 years depending on the plan you choose. After your contract plan ends you have the option to continue paying the same price as you were but with a decreasing death benefit. With proper insurance planning, this coverage can keep inline with your decreasing mortgage balance.

Accidental Death and Disbursement (AD&D)

Accidental death insurance is a type of supplemental life insurance that pays out a death benefit only if the death is a result of an accident. This type of coverage is generally very affordable with coverage amounts ranging up to a maximum of $1,000,000.

The application process is rather simple with quick approval turnaround times. Best of all, most companies will not turn you down regardless of health as long as you meet the age cutoff for coverage.

Some coverage options can also provide living benefits meaning that a specified benefit amount can be paid out due to a loss of a limb or eyesight caused by an accident. There are even companies that offer a return of premium feature should you decide to cancel the coverage later in life.

When to consider an AD&D policy?

The biggest issue with AD&D coverage is that your beneficiary will not be paid out a benefit if your death is not accident-related. If you have this coverage and your death is health-related or anything not related to an accident, no benefit will be paid.

However, as we previously mentioned this coverage is usually very inexpensive and can be a good supplement to a current life insurance plan. AD&D coverage can also be a very good alternative to anyone who cannot qualify for life insurance coverage as you cannot be turned down as long as you meet the age requirements.

Other Types of Supplemental Insurance Coverage

In addition to supplemental life insurance options, there is a wide array of different types of other supplemental insurance options that can work in part with your overall insurance planning. Many of the available plans listed below can work as a supplemental insurance option to a primary health insurance plan by offering some type of specified cash benefit.

Below is a list of some of the more popular options that are available.

Do you need Supplemental Life Insurance?

Now that you know what the available supplemental life insurance options are, the question becomes do you need it and what type do you need?

The first step in this process is to review the current life insurance policy you already have. Understand what it covers, the length of coverage, what the conversion options are, and does it have features such as living benefits?

Then, take a look at your own situation. Do you have a large family? Do you have new financial liabilities? Does your current life insurance plan leave financial gaps that need to be filled?

If you do, a supplemental life insurance policy could very well be the solution to filling those financial gaps ensuring that your family is well protected.

Your one-stop online guide for life insurance quotes. Get free quotes now!

 Secured with SHA-256 Encryption

What’s the Best way to get Supplemental Life Insurance?

If you currently have life insurance coverage through work then there is a good chance they may offer a supplemental life insurance option. However, with employer-provided plans you need to be aware of a couple of things:

Is the coverage portable?

This is a big question that needs to be addressed when considering extra coverage. Should you leave the company or retire from the company you work you need to know if that coverage stays with you or will it terminate?

Will the premium increase over time?

Understand how the coverage works and if there is an increase in premiums after a certain amount of years. Some group life insurance policies are known for a premium increase every fifth year.

Is it actually life insurance coverage?

This goes in part with understanding how the coverage works, but you’ll want to make sure that the supplemental insurance is actual life insurance and not payable on accidental death only.

Is it better to just buy an individual policy on my own?

Purchasing a supplemental life insurance policy outside of an employer-provided plan can often be the best option. The reason being for this is having more coverage options as well as affordability.

Working with an independent life insurance agency such as Top Quote Life Insurance can offer you with over two dozen highly-rated life insurance companies. This allows us to shop your supplemental life insurance coverage for the best rate based on your financial needs.

Get a Quote on Supplemental Life Insurance

In these cases, you need something that will do what your standard life insurance policy won’t do for you (without breaking the bank in the process).

If you need a starting point, take a look at our picks for the top 25 best life insurance companies in the US.

But if you’re ready to get started and need to get a quote, we’re ready to help.

Ready to Compare Life Insurance Rates? Enter your ZIP code below.