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What Is a Supplemental Insurance Plan?

When you have a primary insurance policy, it may not help you pay for every cost you incur. To fill this financial need, many people buy supplemental insurance policies to help fill in the gaps in coverage. You can buy supplemental insurance policies for health coverage, dental coverage and disability insurance.

  1. Supplemental Insurance

    • Supplemental insurance is a type of extra policy that you can buy to provide additional benefits in a particular coverage area. When you have a primary insurance policy and a supplemental insurance policy, the primary insurance will pay claims first. Then if anything is left over after the primary insurance company makes its payment, the supplemental insurance company will then step in and pay a portion of the claim. If anything is left over after both insurance companies pay, you have to pay out-of-pocket.

    Health and Dental

    • When you have a primary health insurance policy from an employer, you may also be interested in buying an additional supplemental policy. In some cases, your primary health insurance company will only cover 80 percent of covered expenses. The other 20 percent can add up to a large amount of money. When you have a supplemental insurance policy, it can pay for the other 20 percent. Some people buy extra dental coverage to provide benefits on top of a policy provided by their employer.

    Disability Coverage

    • Another area in which supplemental insurance policies are common is disability insurance. In many cases, employers will pay for a short-term disability insurance policy and a long-term policy for their employees. With these policies, you usually receive a percentage of what your income was before the disability occurred. If this is not enough to make ends meet, a supplemental insurance policy can pay additional benefits on top of what you receive from your regular policy.

    Medigap

    • When you reach retirement age, Medicare can help you pay for many of your medical expenses. However, if you choose to participate in the original Medicare plan that is provided directly by the government, you will notice some gaps in coverage. Many people in this situation buy supplemental insurance policies known as Medigap policies. These policies help fill in the gaps left by Medicare and attempt to limit the amount of out-of-pocket money required by policy holders.

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