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Supplemental Insurance

When you incur a loss, the insurance company assigns a monetary value based on what the policy covers and pays you up to limits specified in the contract. Sometimes the primary policy coverage isn’t enough. That’s where supplemental coverage fits in.

Supplemental Insurance Defined

Sometimes insurance doesn’t cover something you need. For example, health insurance often excludes dental care. Coverage might not pay enough to offset a loss. In either situation, a supplemental policy fills in the gaps by providing extra coverage. The consumers who seek this extra protection vary. Retirees frequently take out supplementary policies because Medicare won’t pay some costs. An employee might buy additional life insurance when limits on coverage through an employer is insufficient to protect her family’s financial future.

Supplemental Policy Types

Insurers sell supplemental policies for many types of insurance. Homeowners buy additional coverage when their primary insurance doesn’t cover risks like floods or earthquakes, and if loss of personal property such as furniture is excluded. A person with a big mortgage or growing family may not have a primary life insurance policy that will pay off debts, so he can get supplemental insurance to safeguard his loved ones. Supplemental policies are popular for health care, particularly Medicare. Coverage often doesn’t include vision and dental care. In addition, consumers may have large co-payments and deductibles. In these situations, extra coverage can make the difference between getting medical bills paid and financial hardship.

How Supplemental Coverage Works

When you make a claim under a supplemental policy, the payment determination depends on the kind of insurance. You generally get an extra check with life insurance. For property or health coverage, it’s more complicated. These types of extra insurance pay only for items not covered by primary insurance. For example, Medicare Advantage pays for deductibles and co-payments covered by the policy, but only after Medicare has paid everything it covers.

The Benefit of Supplemental Policies

More comprehensive coverage is valuable. However, the major benefit of extra coverage is security. Whether it’s your property, health or life, the extra coverage means protection for you and your family.