What Is Supplemental Insurance?

What Is Supplemental Insurance?

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Anything can happen at any time in life. And whether you have employer-provided health insurance or are self-employed and pay for your own, sometimes there are gaps in coverage you need to fill.

This is where supplemental and alternative policies like accident insurance, critical illness insurance and hospital indemnity plans can be truly beneficial for you or your family. These plans help keep you covered no matter what life throws your way.

There’s no guarantee you’ll actually need coverage, but as with any insurance, it’s always better to be safe than sorry.

So what is supplemental insurance’s surest benefit? Peace of mind. Getting a supplemental policy and knowing that you or your family won’t face a hefty financial burden if an accident occurs lets you do what you want to do without being held back by worrisome what-ifs.

Of course, there’s a lot more to it than that. If you’re still wondering what is supplemental insurance, the different types of coverage and how to know if you need it, keep reading.

Accident Insurance

Accident insurance pays out in the event of an accident, injury or accidental death.

Complementing a life insurance or a health insurance policy, these policies provide money to help cover medical costs if you’re unable to work because of your injury. They also provide a lump-sum payout to your beneficiaries in the event of your death, if you have an accidental death and dismemberment policy.

Accident insurance also can be a smart option if you missed the most recent open enrollment period to sign up for health insurance or if you have a high-deductible health plan. Say your plan has a $5,000 deductible, for example. You’d have to pay this amount out of pocket before your health insurance kicked in to cover medical costs. Accident insurance can help fill this gap and reduce your out-of-pocket costs if you experience an accident and haven’t yet met your deductible — or even if you have met it, in which case you have cash to pay for other things like rent or child care.

Critical Illness Insurance

Critical illness insurance provides a cash benefit when you’re facing a life-threatening illness and can’t work. If you’re diagnosed with cancer or experience a stroke, for example, having a critical illness policy in place before your diagnosis could help you cover everyday expenses like mortgage or rent payments, food and other necessities if you can no longer work because of your condition.

Medical debt can sometimes lead to bankruptcy — in fact, medical bills are the top cause of personal bankruptcies in the country — but having a critical illness policy can give you and your family added financial protection and peace of mind.

Hospital Indemnity Plans

Hospital insurance, also called hospital indemnity insurance, provides a benefit for qualified medical services, including hospital stays and ER or urgent care visits, transportation in an ambulance and outpatient or inpatient surgery.

If you already have health insurance, hospital indemnity plans can help offset some of the expenses your insurance may not fully cover related to a hospital stay. Typically with these policies, you get a cash benefit to pay for qualified hospital expenses. In some cases, however, you can use it to pay for other out-of-pocket costs you need to cover while you’re in the hospital, like your mortgage or child care expenses.

It’s important to keep in mind that hospital indemnity plans don’t cover every medical expense. Only certain hospital services qualify, so be sure you understand what a policy covers before you sign up.

How to Sign Up

Shop around to compare rates for supplemental insurance. Since many major insurers offer these policies, if you already have health insurance, it may make sense to start by asking your insurance carrier which supplemental plans they offer and getting a price quote from them for a policy.

Licensed independent insurance agents can also help you find supplemental insurance that meets your needs. While a simple online search can help you find an agent, you can also ask family and friends who have gone this route for a referral to a qualified agent. And your state’s department of insurance website may have resources to help you find an agent, too.

Once you’ve compared rates, choose the plan that offers the best and most comprehensive coverage for the monthly premium you can afford.

No matter what happens, you’ll be glad you did.

Satta Sarmah Hightower

Satta Sarmah Hightower primarily focuses on health care, technology, and personal finances.

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