Sometimes your employer might provide life insurance coverage for the employees, and the extent of coverage is several multiples of the employee’s annual take home salary. Obviously, if the employee has big financial liabilities or larger family, the amount of coverage by your employer is quite insufficient. This is when supplemental life insurance can bridge the gap between coverage and offer an added protection.

Most clients purchase tends to choose from two main types of coverage options – whole life insurance or term life insurance. As the term implies, term life insurance offers the insurance coverage for a stipulated period. Both private companies, as well as your own employee, could provide term insurance. Term life insurance typically is less costly than whole-life insurance, which covers an individual throughout his life.

The main drawback with term life insurance is that majority of the policyholders rely on their employer for term insurance, which inevitably reduces its coverage due to the high cost. A study by the Life Insurance and Market Research Association (LIMRA) in 2015 found that 64% of employees having employer-provided term life insurance suggest that they need more options for their term insurance plan. Generally, employer sponsored plan covers one to two times the employee’s annual salary which is way below than the minimum coverage actually needed for an extended family. Supplemental insurance can compensate the gaps of an employer-sponsored term insurance plan.

Clients often buy supplemental insurance through their employers. One pros of this is that the employee bypasses the medical exam that a private insurer would request mandatory. Anyway, employer-sponsored supplemental insurance may have restrictions, which makes it important to research the coverage carefully. First, it may be in a form of dismemberment and accidental death insurance, which only pays the beneficiaries back if the employee dies or loses hearing, sight or a limb due to the accident. Second, it may be in a form of a burial insurance policy. Here the insurance only covers the burial and insurance expenses of the employee which is limited in between $5,000 and $10,000. Most importantly, majority of the employer-sponsored supplemental plans are not portable which terminates the coverage if the employee leaves or terminates from the company.

Some employers offer employees with the option to buy supplemental life insurance with increased coverage and do not have limitations like dismemberment and accidental death insurance or burial insurance. This might be the ideal solution for employees having larger families, although such insurance normally lacks the portability of private insurance. As a typical employee stays with an employer for more than 5 years, buying supplemental insurance through a private insurer may be a better option. Private insurers provide customized supplementary coverage plans in which employees can decide how much they need above the employer-provided coverage. No matter how long you decide to work with your current employer, you can continue with your private insurer supplemental coverage until it expires. What’s more, if your life circumstances change with time, you have the power to adjust the amount of coverage accordingly as per your wish.


  1. It was nice to know from this that there is such a thing as supplemental life insurance. I think it would be beneficial to have one.

  2. Excellent! i didn’t even think like this about life insurance. This article has changed my point of view about life insurance. Truly to say i didn’t have a good idea about life insurance and i always tryed to avoid this topic. I thought it’s just west of money and time. But you explained very well. Now i have changed my mind.
    i am thinking to go for life insurance. Thank You very much.

  3. Its depend on many thing such as my income and if i marred or not. in case of married i think life insurance will be better choice than term, which gave me protection. but if i individual, i think i would pick out term insurance as its considered the cheapest plan available in the market. and its designed to protect you from unexpected i think its suitable for me

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