Understanding Supplemental Insurance: Pros & Cons
Posted: August 7, 2023 in Achieving Financial Goals
Have you ever been drowning in medical bills? It can be stressful and overwhelming. Even if you're insured, your insurance may not cover all of your expenses. This is where supplemental insurance can prove highly beneficial. It provides an added layer of protection that can help cover medical and nonmedical costs not covered by traditional insurance policies. Let's explore the pros and cons of supplemental insurance before choosing this type of coverage for yourself or a loved one.
What is Supplemental Insurance?
Supplemental insurance is a type of insurance that covers expenses your regular policy does not cover, but it is not a substitute for traditional insurance. Supplemental insurance can add coverage to many insurance policies, including disability, health, liability, and even auto insurance. The coverage is meant to supplement another policy, such as excess liability, out-of-pocket costs, and even living expenses following a qualified illness or injury. This can ensure you have the resources to get back on your feet following an unexpected event. ProFed offers extra or supplemental insurance coverage for your vehicle with Guaranteed Asset Protection Plus (GAP) or Mechanical Repair Coverage (MRC) and for your loan payments should you experience involuntary unemployment, death, and disability with Debt Protection.
What Are The Pros of Supplemental Insurance?
Supplemental insurance can help reduce the financial burden an accident, illness, or involuntary unemployment can cause. Here are a few benefits supplemental insurance coverage can provide.
Financial Security
If your car breaks down, you get into a severe accident, or you suffer from involuntary unemployment, disability, or death; you could be stuck with extensive bills. Even with a comprehensive insurance plan, deductibles, copays, coinsurance, and other expenses can quickly add up. Supplemental insurance can help cover these expenses, helping to ensure your family's financial security during a difficult time.
Peace of Mind
One of the biggest benefits supplemental insurance provides is peace of mind. Depending on your financial situation, you may need help covering the bills of an emergency even though you have insurance coverage. Supplemental insurance can help provide the peace of mind of knowing your family won't struggle to make ends meet.
Flexible Coverage Options
Depending on your chosen policy, your supplemental insurance could cover various expenses. For instance, Guaranteed Asset Protection Plus (GAP) supplemental insurance could cover what your primary auto insurance will not cover for a wrecked vehicle. Flexible coverage options allow you to create a policy that meets your needs and ensures you will have access to the resources you need to help you get back on your feet following an unexpected event such as an accident, death, disability, or involuntary unemployment.
What Are The Cons of Supplemental Insurance?
While supplemental insurance can be highly beneficial, there are also some things to consider. Here are a few considerations for supplemental insurance to keep in mind.
Costly Premiums
As with any insurance policy, the cost of supplemental insurance can vary greatly depending on what type of policy you are looking for. While some plans can cost only a few dollars a month, others can cost hundreds for your monthly premium. It's important to compare quotes and decide whether the upfront costs of supplemental insurance are worth the protection it provides.
Coverage Limits
One of the most significant drawbacks of supplemental insurance policies is the coverage limits. For instance, with Mechanical Repair Coverage, you'll typically need to pay out of pocket until your deductible is met on your primary policy before supplemental insurance takes over to cover a costly vehicle repair. Additionally, unlike primary insurance policies, supplemental insurance policies can deny coverage based on your health status or whether or not you have any preexisting conditions.
Are There Alternatives To Supplemental Insurance?
If you're interested in learning more about the different supplemental insurance ProFed offers, click here. Or you can look into an alternative to supplemental insurance, a Health Savings Account (HSA). An HSA is a type of savings account that lets you set aside money on a pre-tax basis that would allow you to pay for qualified medical expenses.
Feel free to schedule an appointment with ProFed Credit Union to learn more about supplemental insurance or health savings accounts and the benefits that they can provide.
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