Do You Need Supplemental Life Insurance?

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:

• End-of-life expenses.
• College tuition for your children.
• Co-signed debts.

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:

• Purchase a home.
• Get married.
• Have children.
• Start a business.

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:

• Own a home.
• Have grown children who can care for themselves.
• Have enough savings to cover your end-of-life expenses.

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.