Why Do I Need Supplemental Term Life Insurance?

Supplemental term life insurance is life insurance added onto an existing whole life or other permanent life insurance policy. The supplemental insurance provides additional life insurance benefits to the base face amount of insurance of the permanent policy.

Benefits

Additional term life insurance added as a supplemental rider can add significant amounts of life insurance to permanent insurance for a much lower cost that what you would pay if you purchased the entire amount in permanent coverage. This allows you to obtain more insurance coverage for less premium. You often also have the option to convert part or all of your term supplement to part of the permanent policy later.

Drawbacks

Supplemental term insurance is typically annual renewable term life that increases in cost every year. However, even a level term supplement eventually must be converted to permanent insurance or dropped altogether.

Considerations

Consider what the extra supplemental coverage would be for. For example, supplemental term could be used for temporary insurance to cover your mortgage. When the mortgage is paid, you can remove the term supplement.

References

• "Practicing Financial Planning for Professionals (Practitioners' Edition), 10th Edition"; Sid Mittra, Anandi P. Sahu, Robert A Crane; 2007
• "Life Insurance"; Kenneth Black, Jr., Harold D. Skipper, Jr.; Prentice-Hall Inc.; 1994