Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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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...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Aug 24, 2021

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The Brief

  • Supplemental life insurance adds additional benefits to an existing insurance policy
  • Your age and the level of coverage you choose determines the amount of premiums paid for supplemental life insurance
  • Supplemental life insurance can be beneficial for a wide variety of people, but it is most often purchased as group life insurance from an employer
  • If you purchase supplemental life insurance from your employer, the coverage is typically portable

Supplemental life insurance offers additional benefits to your existing insurance policy. It is helpful, especially when you are sick and your family members cannot pay hospital bills. This can be an especially beneficial type of life insurance for elderly parents.

In such a situation, a certain percentage of the amount of money you would have received as a death benefit may be issued to help in paying the bills.

Though supplemental life insurance is usually job-dependent, it is portable in some companies. This means that you are allowed to keep the policy active even after you leave your job.

Are you wanting to purchase affordable supplemental life insurance? Enter your ZIP code below, and we will help you find insurance companies in your locality that can fulfill your needs.

What is supplemental life insurance?

Supplemental life insurance is a form of life insurance that you can purchase in addition to another life insurance policy that already acts as your primary insurance.

In most cases, if you are employed full-time, your employer may offer you supplemental life insurance at a lower cost or for free.

Supplemental life insurance can cover dismemberment, accidental death, or burial cost. In addition, supplemental life insurance helps expand the financial coverage that will help your family members pay bills if you die.

Supplemental life insurance may involve:

  • Coverage for your spouse and children
  • Coverage you buy in addition to your existing life insurance policy
  • Coverage that pays you if you lose your life in an accident or you are seriously hurt

You can purchase supplemental life insurance through a private insurer or work to expand your existing insurance policy.

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How does supplemental life insurance work?

With employer-sponsored supplemental life insurance, a single contract covers a group of individuals. The owner of the policy is your employer.

If you die and you were covered by supplemental life insurance, your beneficiaries will receive a life insurance death benefit.

Depending on your employer’s policy, the death benefits received by your beneficiaries may be a flat dollar sum, equal to a one-year salary, or a different amount.

According to the March 2020 National Compensation Survey from the United States Bureau of Labor Statistics, employers with a flat dollar amount for group insurance get $20,000 as the median coverage for life insurance.

Some supplemental life insurance companies allow their clients to covert this coverage to an individual life insurance policy. This is possible if the group insurance is terminated or reduced due to the employer’s failure to pay the premiums.

Thus, you are given a chance to convert a portion of the supplemental life insurance to permanent personal life insurance.

Moreover, some supplemental life insurance companies have made their policies portable, but this is not popular. When a company makes a policy portable, they allow you to keep your policy active even after leaving your job.

Supplemental life insurance may provide some add-ons, as some employers may decide to involve extra benefits in a group policy. These benefits may include a waiver of premium benefits or an accelerated death benefit.

With accelerated death benefits, those suffering from terminal sicknesses can receive their life insurance payouts early.

The payouts that you get are usually a percentage of the amount of the death benefit you were supposed to receive.

The insurance company determines the limit. However, it ranges between 50% to 90% of your complete death benefits.

In addition, a waiver of premium benefit helps employees who have become fully disabled to keep the group insurance policy without paying any premiums.

In some cases, for you to qualify for a waiver of premium rider, you must have been disabled for at least 180 days and be less than 60 years old.

How much is supplemental life insurance?

There is no average cost of supplemental life insurance. Instead, the supplemental life insurance company comes up with the price to be paid by every group.

They do so by evaluating policy designs for every claim, the demographics of the group, past claims, and life expectancy.

Supplemental life insurance rates are based on expenses, expected claims cost, and profit margin of each group.

Your employer determines how much supplemental life insurance you can buy. Many organizations will set limits based on your salary.

Maximum coverage amounts typically range between $250,000 and $500,000, but some high-level managers can have coverage up to millions.

The amount of your premium may depend on your organization, age, and choice of coverage level.

For example, if you are less than 30 years old, the cost per $1,000 of coverage could be $0.0140, while someone who is over 70 years old may have to pay $0.5000 per $1,000 of coverage.

Where can I find a supplemental life insurance company?

You can find a supplemental life insurance company in almost all states that offer life insurance policies. These companies will provide you with supplemental life insurance coverage.

In most cases, people buy supplemental life insurance through their employer, but it is available from private insurers.

To purchase a policy, most supplemental life insurance companies require you to have a primary life insurance policy first.

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Should I buy supplemental life insurance?

Is employer supplemental life insurance worth it? Buying supplemental life insurance from your employer may be beneficial because it offers extra benefits to your existing life insurance policy.

If you’ve been trying to get supplemental life insurance privately without success due to your health, an employee group supplemental life insurance policy may be able to help.

However, before purchasing it, you should compare rates and policies from different life insurance companies. In some circumstances, the cost of supplemental life insurance may not be worth its cost.

Therefore, before purchasing supplemental life insurance, you should consider some key factors like where to buy it, alternative options, existing coverage, and portability.

Enter your ZIP code into our free quote comparison tool below to get supplemental life insurance quotes.