What is supplemental insurance and when do you need it?

You might be thinking, "I have health insurance, car insurance, and homeowners or renters insurance. Do I really need more?" There are actually a few other insurance options you might want to consider. These are called "supplemental" or "extra" types of insurance. Let's explore what they are and why they may or may not be a good idea.

When you buy something expensive, like a new computer or a big TV, the store might offer you an extended warranty. This is a promise that the store will fix or replace the item if it breaks during a certain period of time. Extended warranties can be helpful, but they can also be pricey. The cost varies depending on the item and the length of the warranty, but it can sometimes be as much as $10\mathrm{\%}$‍ to $50\mathrm{\%}$‍ of the item's price.

The benefit of getting an extended warranty is that it can save you money if the item breaks. But the downside is that you might never need it. Before you decide to buy an extended warranty, think about how likely it is that the item will break, how expensive it would be to fix or replace, and whether you can afford to pay for repairs or a replacement without the warranty.

If you have a mortgage, your lender might offer you a mortgage protection. This type of insurance pays off your mortgage if you pass away, so your family doesn't have to worry about making the payments. The cost of this insurance depends on your age, health, and the amount of your mortgage, but it could be a few hundred dollars a year or more.

The primary advantage of mortgage protection is the reassurance it offers. With this insurance in place, you can be confident that your loved ones will not have to worry about losing their home should something happen to you. The downside is that it can be expensive, and you do not need it if you already have life insurance that would cover your mortgage payments.

Accidental death and dismemberment (AD&D) life insurance is a type of insurance that pays you or your family if you die or get seriously injured in an accident, like a car crash or a fall. The cost of this insurance depends on your age and how much coverage you want, but it could be as low as $\mathrm{\$}10$‍ a month. Your employer may even offer it for free, or for a very low cost.

The benefit of AD&D insurance is that it can provide extra financial help if you or your family are affected by a serious accident. The downside is that it only covers accidents, not other causes of death or injury, so it might not be necessary if you already have life insurance or disability insurance.

If you have a car loan, you might be offered car loan payoff coverage. This type of insurance pays off your car loan if your car is totaled (completely destroyed) in an accident or stolen. The cost of this coverage depends on your car and your loan, but it could be a few extra dollars a month on your car insurance bill.

The benefit of car loan payoff coverage is that it can save you from having to pay off a loan on a car you can't use anymore. The downside is that it might not be necessary if you have enough savings to cover the loan or if your car insurance already includes this coverage.

Debt cancellation coverage is a type of insurance that cancels your debt, like a credit card balance or a personal loan, if something happens to you, like losing your job or getting sick. The cost of this coverage depends on your debt and the type of event that would trigger the cancellation, but it could be a few extra dollars a month or more.

The benefit of debt cancellation coverage is that it can protect you from having to make payments on your debt if you're in a difficult situation. The downside is that it might not be necessary if you already have enough savings or disability insurance to cover your debt payments.

Credit life coverage is a type of insurance that pays off your debt if you pass away. This can be helpful for your family, so they don't have to worry about paying off your debt. This coverage is usually offered with credit cards and certain types of loans. The cost of this coverage depends on your age, health, and the amount of your debt, but it could be a few extra dollars a month or more.

The benefit of credit life coverage is that it can provide financial help for your family if something happens to you. The downside is that it might not be necessary if you already have life insurance or other insurance that would cover your debt payments.

In conclusion, supplemental insurances can be a good addition to your overall financial protection plan, but they may not always be needed.

If you already have other policies like life insurance or disability insurance, they might already cover you for many of the things that supplemental insurance would. The great thing about supplemental policies is that they are generally much cheaper compared to main policies. So, if you don't have other policies in place, adding a supplemental insurance policy can be an affordable way to get extra protection.

It's important to be smart about your money and make sure you have the right coverage for your needs. So, take the time to review your current insurance policies and decide if supplemental insurance is right for you.