Can You Have More Than One Life Insurance Policy?
Do you have a life insurance policy and are wondering if you can take out yet another one? The good news is that you can. It is perfectly legal to have several policies covering your loved ones in the face of your death.
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Many people have multiple policies in order to cover them in the short-term and long-term. In other words, they carry a term insurance policy as well as a permanent life insurance policy. Both policies provide your loved ones with money if you pass away, but how they work is completely different.
Why Would You Want More Than One Life Insurance Policy?
You might wonder why a person would even want more than one life insurance policy? After all, they have to pay the premiums, so what’s the benefit of having more than one policy?
Some people do it just to stay organized. Let’s say you take out one policy to cover the cost of the mortgage on the home. You don’t want your loved ones to have to move, so you want the home paid for so they can live in comfort. You may take out another policy to cover your children’s college education in the event of your passing or you may want a policy that will cover your changing financial needs by purchasing policies with different terms.
A few other reasons you may want to consider multiple life insurance policies include:
- Help your family live comfortably without your income
- Stagger the dates the term policies expire, so that you always have coverage no matter how long you live
- Help support a business partner if you open a business
- You want to supplement a life policy given to you by your employer
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There are literally hundreds of reasons you may want to consider more than one policy. You should explore the options with your insurance agent to see if it makes sense for you.
Contrary to popular belief, multiple life insurance policies are not mutually exclusive. You can have more than one policy in effect at the time of your death. As long as your loved ones are in contact with the insurance company and provide the necessary proof, they should be able to cash in on all eligible policies at one time. This way they can manage the debts and finances just as you planned when you were still alive.
Buy Insurance as You Can Afford It
Life insurance doesn’t come cheap. Young adults just starting out in life often turn to term life policies or rely on the policies given to them by their employers. Once they get more financially secure, they are able to expand their policies, but it doesn’t make sense to cancel an inexpensive term policy they already took out. Why not maximize on those savings and take out another policy that will further cover the financial needs you see your loved ones having as you expand your family, belongings, and debts?
Buying insurance in staggering tiers can make it more affordable and give you the coverage you need over your lifetime. It allows you to plan for the unexpected, but also help you as you age and need money to supplement your retirement income.
Life insurance can be confusing and helpful all at the same time. Talk to your agent about the right policies for you. It often makes the most sense to buy multiple policies from the same insurance company to account for any discounts the agency may be able to provide.
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