It’s absolutely essential that you understand all of the policy’s limitations when looking at supplemental life insurance. This is true for any insurance policy, of course. But it could be even more crucial for this type of policy, which can have so many clauses and exceptions.
The bottom line is that the less likely you are to need insurance, the less you should pay for it. If your AD&D policy pays out in exactly two types of accidents that you’re never likely to experience, it’s probably not worth the cost. But if the policy covers a broad variety of accidents and issues, it could be worth your while.
I’ll mention just one more time the portability issue, too. With any non-portable life insurance policy, be sure that you have backup or at least a plan for ensuring you’re covered properly if you move to new employment.
Before you sign up for any employer life insurance plans, shop around to see what you can get on your own. Again, if you’re young and healthy, you may get better coverage at a lower cost than you’ll get through your group policy. This is somewhat unusual unless you’re in excellent health, but it can happen.
Even if the private coverage you find is slightly more expensive, it can be worth a few extra bucks a month. You’ll get portable coverage that you know will last for the entire life insurance term.
For older adults, or those who are less healthy, the employer-based coverage is likely to be the cheapest option around. But, still, if a limited supplemental life insurance policy is pretty expensive, it may not be worth it. Just balance the monthly cost against your needs and the likelihood that you’ll use such a policy.
Remember, if this is an optional benefit through your employer, you’ll probably reduce your paycheck by the amount of the premium. So if it makes more sense to go with a private policy, you get money back in your paycheck to pay for the insurance on your own.
The Bottom Line
So now you know what supplemental life insurance is, but it’s still up to you to decide if it’s worth the cost. Just do your due diligence. Make sure you understand the policy you’re being offered and its costs. Then, shop around to see if you can do better on the private market.
If you’re exclusively shopping on the private market, consider adding supplemental insurance to your term life insurance policy. In some cases, you can add accelerated burial benefits or an AD&D rider to your existing policy, and this may be cheaper than purchasing it separately.
Either way, though, be sure you know