Health insurance covers you for most illnesses and injuries, but most policies require you to pay large out-of-pocket costs. Supplemental insurance can help you bridge the gap in what you have to pay and also can offer you payment if you encounter certain types of illnesses or injuries.

A supplemental policy is a type of insurance policy that covers you for a certain event or group of events related to your health. It might offer you an additional benefit if you are hospitalized or pay you a lump sum if you are hurt in an accident.

A supplemental policy can be a good idea for anyone, but it is an especially good choice for anyone for whom a layoff due to injury or illness would present a financial hardship. Those who work in dangerous jobs where an injury could leave them unable to work for long periods of time can benefit from a supplemental policy. It also is a good idea for a spouse or parent who is the main or sole breadwinner in a family.

A supplemental policy usually covers a specific event or narrow category of life situations. For example, it might cover a work accident, a serious illness or your death. If you have a qualifying event, the policy will pay out benefits, often in a lump sum. Such policies often are offered as part of a voluntary benefits package at your workplace.

Different types of coverage
There are a number of different types of supplemental insurance. Accident insurance pays you a lump sum if you are hurt in an accident and can’t work. Critical illness insurance pays you benefits on top of your health benefits if you are diagnosed with cancer or another illness covered by the policy. Other supplemental policies include disability insurance and hospital insurance.

Major benefits
The main benefit of having a supplemental policy is having an additional financial cushion to provide income if you are hurt or get sick and can’t work.