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Supplemental insurance coverage fills in the gaps of traditional insurance. Here’s what you need to know about this kind of coverage to help decide if it’s something you should consider.
Supplemental insurance can be a sidekick to traditional health insurance
Supplemental insurance coverage isn’t comprehensive; it’s designed to work alongside and cover the gaps left behind by a typical health-insurance policy. This is accomplished by paying benefits directly to you, giving you a buffer to overcome the potential financial burdens of an unexpected hospital stay, illness or accident.
The time you spend in the hospital, or simply ill at home, may also result in lost wages. You might have travel costs from plane tickets or hotel lodging if you have to travel far to be seen by a specialist or to undergo surgery in a hospital known for its specialization in your condition. These costs are often covered under a supplemental insurance policy in the form of monetary assistance. For example, cancer insurance and critical-illness supplemental insurance pay out a cash benefit in the event you’re diagnosed with cancer or suffer a heart attack or stroke.
There are also supplemental insurance products designed to cover more than a typical insurance policy.
Other ways to use supplemental insurance
Another effective use of supplemental insurance is for dental and vision care, which sometimes isn’t included in an employer’s medical plans.
For example, the deductibles for major dental and vision operations can sometimes be quite high. A supplemental plan can help you pay for a high-deductible operation, especially when you believe one may be in your near future.
Where to buy supplemental insurance
Aflac, the supplemental insurance company well-known for its advertisements featuring the Aflac duck, is a popular choice for consumers. However, there is a range of companies offering comparable products. For example, AARP offers a range of supplemental insurance products. Some supplemental insurance can only be purchased through a payroll deduction from an employer, including short-term disability insurance, which is offered by Aflac and other companies.
Unlike most insurance companies, though, Aflac focuses on supplemental insurance. It does, however, also offer life insurance, along with stand-alone dental and vision coverage.
Cigna offers supplemental insurance policies with a similar range as Aflac’s. And some companies that are leaders in auto and home insurance are also active in supplemental coverage. Allstate sells accident and disability, critical illness and long-term care supplemental insurance, and State Farm offers supplemental medical insurance that covers the added cost of hospital stays.
Depending on the policy you have in place, the specific situation you’re dealing with, and your preference, you can elect to receive your benefit as a lump sum or have it disbursed over time.
Promises Payment Flexibility
Standard health insurance typically offers little or no choice in when and how you’re reimbursed for expenses you incur. Supplemental policies frequently offer a wider range of payment options. For example, if you’re recovering from a stroke, you may request that the entirety of your benefit is paid to you all at once, or elect for smaller payments as you go through recovery and therapy.
In addition, supplemental insurance is a great choice for you if you believe you’re at risk for needing it. If you have a family history of cancer, for example, it’s worth considering cancer insurance coverage, since you likely have a higher risk of being diagnosed with cancer.
It Isn’t ideal for filling Medicare’s gaps
Many older Americans seek additional insurance to supplement what’s available through Medicare, the universal federal healthcare program.
As a rule, a more comprehensive medical plan, like Medigap or a Medicare Advantage plan , is a far better option than supplemental insurance for covering the gaps left behind by Medicare A (hospital coverage) and B (medical) plans.
Shop around for supplemental insurance
As with all other types of insurance, you should of course always shop around and compare coverage from different companies before you make a decision. When purchasing supplemental insurance, it’s important for you to understand exactly what will be covered by the policy. A critical illness policy, for example, may only cover one or two specific illnesses.
The premiums for supplemental insurance are dictated by your age at the time of purchase. They may also be affected by your health status if it’s an underwritten policy. Tobacco use tends to have a substantial impact on the cost of premiums, for example, as it does with some other types of insurance. Be sure to speak with your agent to ensure your policies give you as much coverage as you deem affordable and necessary.