What is the purpose of "supplemental insurance"?

Supplemental insurance is designed to provide additional coverage that complements or fills gaps in an individual's primary insurance policy. Many insurance plans, such as health insurance, may not cover certain expenses or may have limitations on coverage amounts. Supplemental insurance steps in to cover these additional costs, ensuring that individuals have broader protection against unexpected financial burdens.

For example, if a health insurance plan has a high deductible, supplemental insurance can help cover those out-of-pocket expenses. By providing extra financial support, supplemental insurance helps policyholders manage their risks more effectively, enhancing their overall security without replacing their primary coverage.

The other options propose alternatives that do not accurately represent the role of supplemental insurance. It is primarily an addition to existing coverage rather than a replacement, cost reduction, or exclusively a tax benefit vehicle. Thus, the correct understanding of supplemental insurance emphasizes its role in enhancing coverage rather than serving as a standalone solution.