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Do You Need Supplemental Insurance?

As a young professional, it’s easy to begin thinking that you are practically invincible. If you have a job that offers health care benefits (and if you’re ready for the PPACA to take effect in 2014 [3]), it doesn’t seem necessary to supplement with anything else.

Unfortunately, this isn’t always the case. There are many reasons that even young professionals should consider supplemental insurance.

What is Supplemental Insurance?

Basically, supplemental insurance is the “extra” insurance that you can buy to help cover situations that might not be covered ┬áby your regular insurance. You might want to buy vision or dental insurance. Perhaps it makes sense to purchase disability insurance. [4]

When you look at your health policy, and realize just what isn’t┬ácovered, you might be surprised — and ready to supplement your insurance needs.

Disability Insurance

One of the most important types of supplemental insurance, says attorney Shane Fischer, is disability insurance. “I recommend everyone purchase long-term disability insurance, and periodically increase the coverage as your income grows,” he says.

“As a personal injury lawyer, I see normal, healthy people get severely injured in accidents that prevent them from resuming a normal life,” Fischer continues. “Because they don’t have long-term disability insurance, they can’t maintain their lifestyle, and are put in a real financial bind trying to pay the bills with their meager savings.”

This can make sense for many young professionals. Even if you feel that catastrophic/accident health insurance is sufficient for your needs (since you might not have any recurring health issues and no family), it can still make sense to supplement with long-term disability. That way, if you are unexpectedly injured and can no longer work, the insurance will help you make up the difference.

Fischer suggests, too, that you save up a good chunk of money so that you can cover your costs in the short-term. That way, you might not need to get a short-term disability policy on top of the long-term version of the policy.

Other Supplemental Insurance

Other types of supplemental insurance should be considered based on your situation and your obligations. I have a son who will doubtless need braces in the next few years. As a result, we’re looking for policies to help cover those costs — even though dental insurance isn’t something we’ve supplemented with in the past.

We also don’t feel the need for vision insurance. We pay for yearly eye exams and corrective lenses/glasses out of pocket. The fact that we have a Health Savings Account makes these costs tax-deductible, so there is at least a little bit of a benefit, even though we don’t have insurance.

The type of insurance you get, and the amount of coverage that you buy, should consider you situation. If you have a family history of chronic disease, it might make sense to get extra insurance, or to buy long-term care coverage. If you have a young family, your insurance considerations should also take into account the impact your loss of income could have on your entire family.

Remember: insurance is designed to protect your assets. If your current policies aren’t enough to take care of the situation, consider supplemental insurance.

(Photo: Walt Stoneburner [5])