Do You Need Supplemental Life Insurance?

Written By Mary Beth Eastman
Last updated August 28, 2019

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August 28, 2019

Simple. Thrifty. Living.

About 60% of Americans have life insurance. Most of those people get life insurance as a benefit from their employers.

Unfortunately, employees don’t get to choose the level of coverage that they get. That means you may need supplemental insurance during certain times of your life.

Before you can decide whether you need supplemental life insurance, you need to know what your current policy covers.

If you get life insurance as an employee benefit, then your policy might cover up to $250,000. The money from your policy is intended to replace your annual earnings and pay for things like:

Some employers give select employees plans worth up to $1 million. You probably don’t have that luxury, though, unless you’re an executive at a large corporation.

Assuming that you have a $250,000 life insurance policy, you might wonder how your family can afford to maintain its lifestyle without your income.

Some situations, after all, will cost your family much more than $250,000. For example, $250,000 would not cover the cost of childcare and college tuition for three young children.

Supplemental life insurance can help pay for situations that your typical policy will not cover.

Many people choose to buy supplemental life insurance when they:

Since these events increase the amount of money that your family needs to survive, it makes sense to get supplemental life insurance that will pay their bills after you’re gone.

Few people need supplemental life insurance by the time they reach retirement. At this stage of life, you probably:

Assuming that you have reached these milestones, you don’t need supplemental life insurance.

As you get older, life insurance also becomes more expensive. Eventually, you will find yourself in a position where it makes more financial sense to save money than spend money on increasingly-expensive insurance.

Practically everyone needs a basic life insurance policy that will cover end-of-life expenses and bills. As your life changes, though, you may find that you need to purchase supplemental life insurance policies that give you additional coverage.

Make sure you get the best life insurance by talking to several companies. Once you have quotes from multiple providers, you can compare your options and choose life insurance that matches your unique needs.

About the Author

Mary Beth Eastman

Mary Beth Eastman serves as the content manager for Simple. Thrifty. Living, where she is dedicated to helping readers use money and credit wisely. Mary Beth believes that access to the right financial information paired with a growth mindset are essential tools for getting out of debt and building wealth. Mary Beth has a degree in Journalism from Bowling Green State University and has focused her 20-year journalism career on putting readers front and center, carefully considering their concerns and presenting information that will help them in their everyday lives. She has won numerous statewide journalism awards. Her writing on personal finance as been featured on numerous websites in addition to Simple. Thrifty. Living, including Huffington Post and Lexington Law blog. Mary Beth resides in Pittsburgh, Pa., with her family and two rescue dogs.

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