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Supplemental Insurance

Supplemental insurance is a type of insurance policy that is designed to provide benefits in addition to insurance that someone already has. If a primary insurance policy covered a portion of a loss but left the insured person with an out-of-pocket cost, a supplemental policy would cover all or a portion of the remaining cost.

Supplemental coverage is for anyone who has existing primary insurance but wants to reduce the amount they would pay out of pocket in the event of a loss. This can be especially useful for those with primary insurance that has low levels of coverage or high deductibles (the specified amount of money that the insured must pay before an insurance company will pay a claim). A person would need to examine the cost of a supplemental policy and compare it with any gaps in their current coverage in order to determine if a supplemental policy would benefit them.

For example, let’s look at a common scenario with supplemental dental insurance. Say a person incurs a $2,500 cost for a dental procedure for which their primary insurance policy covers 80%. The primary insurer covers $2,000, leaving the insured person with a $500 out-of-pocket cost. If the person’s supplemental policy paid $400 toward this procedure, the insured person would reduce the portion for which they are responsible from $500 to only $100. The benefit of supplemental coverage in this scenario is very clear.

There are several major types of supplemental insurance in existence, but some of the more popular types include medical, dental, vision, and property insurance such as auto and home coverage.

Even some of the best insurance policies leave the insured person with an out-of-pocket cost in the event of a loss. The primary benefit of a supplemental policy is that it will reduce or eliminate any out-of-pocket cost in the event of a loss that is partially covered by a primary insurance policy.