Supplemental Life Insurance

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Supplemental life insurance (Supp Life) is a term you’re most likely to hear whenever you start a new job. Supp Life is not only accessible through your employer, but you can also get it on top of your regular term life insurance directly from your life insurance provider.

However, not everyone will need it.

Life insurance and all its various parts can be complicated and difficult to understand, but with a bit of homework, you can save a lot of money on your premiums in the long run.

In this article, I’ll cover everything there is to know about supplemental life insurance.

What Is Supplemental Life Insurance?

Supplemental life insurance is an additional life insurance policy designed to complement your current life insurance coverage. It is very often offered by employers to supplement group life insurance. You can also get private supplemental life insurance straight from a life insurance company, without the involvement of your employer.

Supplemental life insurance through your employer might be a bit cheaper if you have any medical conditions, use nicotine products, or are older (since most of the time, they don’t look into your health history or other factors).

If you are young and healthy, on the other hand, going straight to an insurance company might save you on your premiums.

Whether you are getting supplemental life insurance through your employer or privately, there are few things you need to understand and consider. These policies usually cover specific areas, and it is important to know what you are paying for.

Do You Need Supplemental Life Insurance?

To make sure your loved ones are financially protected, it is recommended to have life insurance worth 10-12 times your annual income. As such, you should revise your life insurance policies whenever your financial situation changes.

If you have less than the recommended amount of coverage, supplemental life insurance can help you to fill in that gap.

Another good reason for getting supplemental life insurance is as a burial and funeral expenses rider. It usually takes some weeks before your family receives the death benefit. Burial insurance is usually faster and might be a great choice if you are worried about your family managing to cover those expenses.

You DO Need Supplemental Life if:

You need supplemental life insurance if you are:

  • Worried how your family will cover your funeral expenses
  • Not covered enough with the life insurance policy you have
  • Going through some life changes, like getting a new house on a mortgage or expecting a new family member

You DON’T Need Supplemental Life if:

If you have enough coverage, it might not be the best move to get supplemental life insurance. You can get a better return on your money by investing it elsewhere instead.

Supplemental life insurance premiums are usually very low, but you should never pay for something you don’t need, even if it’s $20 a month.

What About Spousal Supplemental Life Insurance?

Spousal supplemental insurance is a life insurance policy you can get for your spouse or partner. It might seem like a great idea to get supplemental life insurance on top of yours. The coverage on spousal supplemental life insurance is not very high when compared to other life insurance policies.

Even if your partner is a stay-at-home parent, you should consider all the costs you might incur if she or he passes away, such as child care, transportation, and maybe even housekeeping.

It might be wise at this point to calculate all of your expenses and see whether spousal supplemental life insurance offers enough coverage. Should it not, term or whole life insurance might be a better option for you.

Should You Get an Employer Offered Private Supplemental Life Insurance?

When starting a new job, you will get a lot of benefits. One of them is usually group life insurance. Since the coverage of group life insurance is usually only a few times your wage, your employer will offer supplemental life insurance.

Is Group Insurance A Good Idea?

Group life insurance is always a good idea because you don’t have to pay for it!

It is a good idea to opt-in for supplemental life insurance if the coverage you have is not enough for your family to carry on without you. Premiums of supplemental life insurance are typically deducted from your paycheck.

Just keep in mind that you can also get supplemental life insurance on your own directly from an insurance company. Before deciding on getting supplemental life insurance from your employer, shop around and get quotes from at least a few of the top life insurance providers to get the best price.

Supplemental Life Insurance Is Yours To Keep

Another advantage of private supplemental life insurance is portability.

Most employer-offered supplemental life insurance policies are not yours but the employers’. This means that your employer and not you is the policyholder, and it expires once you change jobs or retire.

Private supplemental insurance is yours and stays with you even when changing jobs.

Can You Cash Out Supplemental Life Insurance?

As with any other term life insurance, there is no option to cash it out. All premiums you are paying go towards your death benefit.

Once your term is finished, all the premiums you’ve paid stay with the insurance company.

This makes supplemental life insurance very affordable, but you should not get fooled by low premiums. Think about whether you need additional coverage for what you have already. After all, if you don’t need it, it’s a complete waste of money that can be invested elsewhere with a nice return.

What is the Difference Between Whole Life & Supplemental Life Insurance?

Whole life insurance and supplemental life insurance are different in many ways. Paying premiums and your family receiving a death benefit might be the only things that are alike.

Here are the main differences for you so you can have a clearer picture of supplemental life insurance when compared to whole life insurance:


In most cases, supplemental life insurance is term life insurance. This means that it expires within a set amount of time. This is especially important if you are getting it from your employer. Those policies are usually renewed every year. Whole life insurance, as the name suggests, is for your whole life.

Premium Rates

Because whole life insurance is for your whole life and has a guaranteed death benefit, the premiums will be higher than those of supplemental life insurance. Even though most people prefer to pay as little as possible, whole life insurance can be the best choice for those that like fixed expenses. Once you sign for whole life insurance, the premiums will remain the same till the end of your life.


Whole life insurance covers everything and has a guaranteed death benefit. This means that your family will receive the money no matter what was the cause of your death. Supplemental life insurance usually will come with many limitations that will be listed in the policy. The maximum benefits of whole life insurance are also higher when compared to supplemental life insurance.


Supplemental life insurance is most of the time signed through the employer and usually not transferable if you change your job. It will also stop once you retire. Whole life insurance is signed without the employer involved and lasts until you die.

Cash Value

Supplemental life insurance cannot be cashed out. The premiums you pay go towards your death benefit, and if you don’t use it before it expires, the insurance company will keep it. Whole life insurance usually has a cash value life insurance option, which has a kind of savings account attached to it.

Supplemental Life Insurance Policy Limitations

Supplemental life insurance comes with many limitations. These limitations will be listed in your policy, so make sure to read the fine print.

While there are many possible limitations, here are some of the most common ones you shouldn’t miss:


Accidental Death and Dismemberment (AD&D) only covers deaths that are caused by accident. There may also be limitations to benefits if you get into an accident and lose a limb or any other serious injury, like loss of eyesight or hearing.

Burial Expense Insurance

This policy will only cover the expenses of burial and funeral. Most of these policies will only cover these expenses in the case of an untimely death. The coverage is usually $5,000 to $10,000.


If a supplemental insurance policy is purchased from your employer, you might not be able to transfer it to another employer after changing jobs. You will also lose it once you retire. This limitation does not apply to private supplemental insurance.

Is Supplemental Life Insurance Right For You?

Supplement life insurance can be a great choice for some – and a waste of money for others. To know whether you need supplemental life insurance or not, you should first check your life insurance policy to see if it covers at least ten times your annual income. If it doesn’t, supplemental life insurance can fill the gap.

When your life insurance policy covers enough or more than enough, you shouldn’t get supplemental life insurance. You are better off investing the premium amount somewhere with a higher return.

If you decide you need supplemental life insurance, you are faced with two options.

The first one is to get through your employer or go straight to your life insurance provider. There is no one option that is the best every time for everyone. The best way to choose is to get quotes and compare the rates and coverages of both.

You also need to pay attention to limitations. If you choose to go with the employer supplemental life insurance, bear in mind that it will probably expire once you stop working there.

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