Supplemental life insurance

How it usually works

• Sold in multiples of salary or in fixed increments
• Guaranteed issue up to a limit, with evidence of insurability required above it
• Priced in age bands, so the rate steps up as you cross into a new band
• Deducted from pay, which makes it easy to hold and easy to forget
• Frequently tied to employment, ending or becoming expensive when you leave

The age-banding effect

This is the detail that changes the answer over time. Group supplemental rates typically rise as you move through age bands, whereas an individual level term policy locks a premium for the whole term.

So supplemental coverage that looks competitive at thirty may be well behind an individual policy by fifty — and by then you're older and buying individual coverage costs more than it would have.

When it's genuinely the right call

• Your health would make individual coverage expensive or unavailable — take every guaranteed issue amount
• You need coverage immediately and can't wait for underwriting
• It's genuinely cheaper than individual quotes for your age and health, and you've checked
• You want a top-up layer above coverage you already own

The comparison to run

Before each open enrolment, get an individual quote for the same amount. It takes very little time and the two numbers are directly comparable.

Also check whether the supplemental coverage is portable, and on what terms — coverage you can't keep is worth less than coverage you can.

Spouse and child options

Many plans offer small amounts on a spouse or children. These are usually modest and are worth comparing against a child rider on your own policy, which may cover all children including future ones.