Is Supplemental Insurance Worth It?

Is Supplemental Health Insurance Worth It?

Health insurance policies may not cover every medical service or expense, such as certain cosmetic procedures and other excluded treatments.¹ This is one reason why supplemental insurance can be worth it for some people. Even with primary health insurance, you may still incur out-of-pocket costs for covered medical care. Supplemental insurance policies can pay cash benefits to help with certain covered expenses. Aflac offers several types of supplemental insurance to provide additional financial protection to help reduce your out-of-pocket medical costs.

5 min. read

Table of Contents

Key Takeaways

Supplemental insurance pays cash benefits to help you cover costs that primary health insurance doesn't.
There are different types of supplemental insurance, including accident, cancer, hospital, dental, vision, critical illness and life insurance.
Deciding whether supplemental insurance is worth it depends on your health risks, finances and current coverage gaps.
Aflac supplemental insurance policies can help provide financial support for out-of-pocket medical expenses.

What is supplemental insurance?

A supplemental insurance policy pays cash benefits for certain covered events. These policies can help fill coverage gaps and provide additional benefits to help cover out-of-pocket expenses.

How does supplemental insurance work?

While there are many different types of supplemental insurance, each policy works in a similar way: You pay a monthly premium in exchange for coverage under the policy. After a covered incident, you submit a claim and, if approved, you'll receive cash benefits according to the terms of your policy. You can use these benefits to help cover costs like deductibles, co-payments and out-of-pocket expenses that your primary health insurance may not cover.

Types of supplemental insurance

Aflac offers several types of supplemental insurance:

Accident insurance

With accident insurance, you can receive benefits due to a covered accident to help provide financial support for costs that aren't covered by your primary health insurance.

Cancer insurance

A cancer insurance policy can help support your recovery and financial planning by paying cash benefits after a cancer diagnosis.

Dental insurance

Dental insurance can help cover preventive care, basic services, and certain major dental procedures to reduce your out-of-pocket costs for oral care. Aflac offers primary, supplemental and Dental, Vision and Hearing (DVH) insurance plans.

Vision insurance

With vision insurance, you can help reduce your out-of-pocket costs for preventive eye care, vision correction materials and other vision-related expenses.

Critical illness insurance

If you're diagnosed with a covered critical illness, critical illness insurance can pay benefits to help you cover expenses not covered by your primary health insurance.

Short-term disability insurance

If you're hurt or sick and unable to work for an extended period, short-term disability insurance can help replace part of your income. Aflac offers short-term disability insurance through worksite payroll deductions, so you pay premiums out of your paycheck automatically.

Hospital insurance

Hospital-related expenses can be significant for some individuals. With hospital insurance, you can receive cash benefits during a hospital stay to help cover hospital bills, prescriptions and other costs associated with a hospital stay.

Life insurance

Life insurance may pay a death benefit to designated beneficiaries if the policyholder were to pass away while the policy is active. This can help provide valuable financial support to loved ones after you're gone. Aflac offers term life, whole life and final expense life insurance.

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Pros of supplemental insurance

Supplemental insurance offers several benefits, including:

Financial support: Supplemental insurance plans may provide financial assistance for unexpected costs not covered by your primary health insurance.
Added peace of mind: With additional cash benefits, you may feel more confident about managing unexpected costs.
Flexible coverage: You can choose the specific policies that best fit your needs and financial goals.

Cons of supplemental insurance

Despite the benefits, there are also some drawbacks to supplemental insurance:

May not cover pre-existing conditions: Supplemental policies often exclude pre-existing conditions.
Costs may add up: If you have several policies, your accumulated monthly premiums may become expensive.
Coverage limitations: Policies typically have elimination periods during which you may be ineligible for benefits, and coverage may be subject to limitations and exclusions depending on the policy.²

Who may benefit from supplemental insurance?

Many people can benefit from supplemental insurance policies. However, supplemental policies can be especially worth it for:

People with high-deductible primary insurance: If your health insurance requires you to meet a high deductible before benefits are paid, supplemental insurance can help provide cash benefits for certain out-of-pocket costs associated with meeting your deductible.
People with medical risks: If you're at greater risk of developing an illness or work in a hazardous job, supplemental insurance can help provide a safety net in the event of a costly injury or diagnosis.
People with limited savings: Medical debt remains a significant financial burden for many Americans, and supplemental insurance can be a valuable resource to help cover unexpected expenses that may not be paid by your primary insurance.³

When is supplemental insurance worth it?

Supplemental insurance may be worth it during certain life stages and transitions. Reviewing your coverage needs is especially important when your health situation, employment status or family circumstances change.

Common situations where supplemental coverage may make sense include:

Retirement: Moving from employer-sponsored coverage to Medicare may leave gaps. Supplemental plans can help cover costs such as copayments and deductibles that primary health insurance doesn't cover.
Job changes: Losing employer benefits or switching to a different policy may result in additional out-of-pocket costs. Supplemental insurance can help fill coverage gaps.
Growing families: New children, marriage or single-income households may increase your financial responsibilities to medical, dental or disability expenses.
Self-employment or gig work: Without employer-provided benefits, you may need additional financial support if an illness or injury keeps you from working.

How much does supplemental insurance cost?

The cost of supplemental insurance varies, depending on the type of policy. Policies will range in cost depending on a range of factors including:

Age: Older people tend to pay more for supplemental insurance plans.⁴
Lifestyle: If you work in a hazardous job or have high-risk hobbies like scuba diving or skydiving, you may pay more for certain policies.⁵
Policy: Policies with higher coverage amounts or benefits (such as life insurance) tend to cost more.⁴