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What is supplemental life insurance, and should you buy it through work?

Does your work offer supplemental life insurance? Wonder if it’s a good deal? We have the answers.

Chances are, you’ve come across the phrase “supplemental life insurance” during your employer’s open enrollment, or when you first joined a new company. It sounds simple enough, in terms of what the words mean. But it’s a little more complicated than that, which is why we’re here to help you figure out exactly what supplemental life insurance is, what the difference between supplemental life insurance and basic life insurance is, and most importantly, whether you need it.

So let’s start here: What is supplemental life insurance and who needs it? Supplemental life insurance is the coverage you can purchase through your work in addition to the group life insurance they might already offer as a benefit. A supplemental policy is usually paid for out of your paycheck. While group life insurance is part of your benefits package from your employer and therefore is usually a free benefit or has affordable premiums, that’s not always true of supplemental life insurance. Whether supplemental life insurance is a good value will depend on the product and your personal age, health and the amount of coverage you’re seeking.

To help you navigate this coverage option, we’ve outlined a few key questions you should ask yourself, and provided answers that will help guide you toward making the right choice for your life insurance needs.

In this article:

Do you get employer-provided life insurance?

Any consideration of whether to buy a life insurance plan should begin with first revisiting what amount of coverage you already have. According to the Department of Labor, a vast majority of workers have access to a life insurance plan through their employer. If that majority includes you, review what coverage amount is currently offered to you. (If you are unemployed, work as a contractor or freelancer, or take part in the gig economy, however, chances are you do not have any employer-provided life insurance policy.)

As we’ve noted before, however, employer-sponsored life insurance coverage is often insufficient, particularly if you have children or own a home. Employer-provided coverage is a nice benefit, to be sure — it’s typically free, or nearly so — but your needs might require additional life insurance coverage. Group life insurance usually covers one to two times your annual salary, enough to pay for, say, the cost of a funeral and other sudden expenses, but likely not enough to complete payments on a mortgage and send your kids to college and … well, you get the idea. That’s where supplemental life insurance comes in. It’s essentially additional coverage you purchase through your employer, at an additional cost that is deducted through your paycheck.

If you’re young and healthy, supplemental life insurance premiums may be higher than what you’d pay for the same coverage on the open market. So make sure you price compare.

Have you compared life insurance rates?

Getting supplemental coverage might cost you more than it would purchasing a life insurance policy in the open market. How much more? That will depend on a range of factors, including your age, health, coverage amount and more. (More on that in a minute.) It will also depend on what kind of coverage you get, and it’s important to note here that a lot of employer-offered supplemental life insurance plans are limited in some way.

You may, for example, see something called accidental death and dismemberment (AD&D) insurance, which is pretty much what it sounds like. If you die or are hurt in an accident during the coverage term, your loved ones will be paid a death benefit. If you die from other causes (including natural ones), however, you’re not covered under accidental death insurance. Another offering might be burial insurance (or final expense insurance) policy, which will pay for your funeral costs — not a small amount — but nothing else.

Compare these types of policies to term life insurance, which offers both more coverage (in terms of dollars) and more flexibility (in terms of how your beneficiary gets and uses those dollars). For example, if you buy, a $500,000 policy, that can be used toward funeral expenses (often in the $7,000 to $10,000 range), plus child care, education, housing costs, and making up for lost income in countless other ways. And you might be able to get coverage for less than what you spend per month on coffee. (We know it’s a cliche, but it’s true.)

With that in mind, if you’re considering buying supplemental life insurance, it’s important to compare these quotes with other products on the open market. Most digital life insurance providers will let you easily get free quotes for coverage. We’ll jump start the research for you here:

Quotes for term life insurance

Age Gender Health Face amount Term length Monthly premium
30 Male Excellent $500,000 30 $36.36
30 Female Excellent $1 million 30 $54.46
35 Male Excellent $500,000 20 $23.34
35 Female Excellent $750,000 20 $27.49
40 Male Excellent $600,000 15 $26.29
40 Female Excellent $800,000 15 $33.05
Source: Haven Term policy sold by Haven Life Insurance Agency (Haven Life)
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How’s your health?

Depending on the type of policy, supplemental life insurance can be a good choice for people who might have difficulty getting coverage outside of work. Let’s say you’re older, you’re a smoker, you’re out of shape, or you have high-risk hobbies (like flying planes or hang gliding). With individual coverage that you buy outside of work, a life insurance company will consider all those factors and price your coverage accordingly.

If you’re younger and healthier, you will get the best rates on life insurance coverage. Let’s say you’re in your 30s and in excellent health: you want the insurance company to price your coverage based on your health. So if that’s you, make sure whatever policy you purchase (supplemental or not) is priced based on your age and health. And remember: always price compare.

What customers say about our rates

Do you need portable coverage (and what is that, anyway?)

One more thing about supplemental life insurance: If you decide to purchase it, be sure to check whether you can take the policy with you if you leave or lose your job.

If you want life insurance in place for a particular amount of time (until your children are grown, perhaps; or until your mortgage is paid off), irrespective of your employment situation, it’s something to consider. On the other hand, if you buy your own term life insurance policy, it goes where you go, and keeps protecting your family even if you change employers (and continue to pay the premiums).

So, should I buy a group supplemental life insurance policy?

To put it simply, supplemental life insurance premiums may be higher than what you’d pay for the same coverage on the open market. So make sure you shop around online before buying a policy.

Some kind of life insurance coverage is better than nothing, but any prudent shopper wants to make sure they get the best value for their dollar. If you’re young and healthy, term life insurance should be an affordable way to help financially protect your loved ones. To find out how affordable, get a quote for coverage at Haven Life.

Life insurance is more affordable than you think

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About Louis Wilson

Louis Wilson is a freelance writer whose work has appeared in a wide array of publications, both online and in print. He often writes about travel, sports, popular culture, men’s fashion and grooming, and more. He lives in Austin, Texas, where he has developed an unbridled passion for breakfast tacos, with his wife and two children.

Read more by Louis Wilson

Our editorial policy

Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

Our disclosures

Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit: https://havenlife.com/plus.html

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