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    A mature man and woman reviewing a life insurance policy with an advisor

    Can You Have More Than One Life Insurance Policy?

    5 mins

    Life insurance policies are very attractive to many Americans. After all, they give peace of mind to those who want their loved ones to be taken care of if anything happens to them unexpectedly.

    But can you have more than one life insurance policy? The answer is yes — to an extent. 

    Having multiple policies has its advantages. If you want to understand the pros of buying additional plans and the limitations of how many life insurance policies you can hold, here is what you should know.

    What Does Life Insurance Consist of?

    Life insurance is a contract that requires you to pay a monthly premium to an insurance company. In exchange, the insurance company guarantees you a certain amount of money that will be paid to your designated beneficiary upon your death.

    Life insurance is primarily designed to be a safety net to make sure your family will have enough to survive if something happens to you and you are no longer there to provide for them.  But it also has other purposes. That’s why you may want to consider having more than one policy, depending on your specific needs.

    The Different Types of Life Insurance Policies

    There are two main types of life insurance that a person can hold. One is known as a term life policy, while the other is a permanent policy. 

    Term Life Insurance

    Term life insurance provides a death benefit payment to a beneficiary if the policyholder dies before the end of the agreed-upon period of time, which might be up to 30 years. Coverage is determined ahead of time and premiums remain consistent throughout the entire coverage period.

    If you’re still alive at the end of the term, you pretty much “lose” the payments that have accumulated since the policy started and you may need to take out a new policy, often at a higher rate.

    Permanent Life Insurance 

    Permanent life insurance is guaranteed to stay active for the entire lifetime of the policyholder.

    There are different subcategories of permanent life insurance:

    • Whole life 

    • Universal life

    • Variable life

    Whole life policies are not only a safety net in case of death — they also allow you to save by accumulating cash value and interest. 

    The savings that accumulate can be invested (although the policyholder does not have control over how the money is invested), and you can withdraw or borrow cash against your policy while you’re alive if needed. The premium and payout are determined at the beginning of the policy and do not change over time.

    Universal life insurance is very similar to whole life insurance, except that benefits and premiums are flexible. So you can also use it as a savings plan and earn interest on it over time.

    With variable life insurance, premiums are preset and you can decide where to invest your savings.

    Why You May Want More than One Policy

    Can you have more than one life insurance policy? Absolutely. Having more than one insurance policy makes sense in several cases. Here, we’ll discuss some of the most common scenarios so you can determine which ones might apply to you.

    If You Only Have Group Coverage Through Your Job

    If you have life insurance through your employer, that’s great. But what happens if you switch jobs? If you’d like the stability and control that a personal policy can afford, you may want to consider purchasing an individual policy on top of the one you get through your work.

    If You Want to Build Your Savings for the Future

    A term life insurance policy is one of the best ways to secure your family’s financial future and replace your income if you pass away. A permanent life insurance policy is a great way to save and get an extra stream of income for retirement.

    If You Want to Be Prepared When Your Financial Obligations Change

    Having more than one policy can prepare you for changes in your financial situation. You may not need as comprehensive of a policy after your mortgage is paid off, for example, but you may want a larger policy if your family gets bigger.

    It’s often a better option to purchase an additional policy on top of the one you have if the rates are reasonable, instead of replacing it with a new one when your circumstances change.

    How Many Life Insurance Policies Can You Have?

    So how many life insurance policies can you have at one time? Depending on your age and the specific insurance companies that you work with, limitations may vary.

    For those less than 40 years old, coverage can not be higher than 35 times your yearly revenue. Between the ages of 40 and 50, coverage is limited to a maximum of 25 times your annual revenue. For those up to age 60, the maximum coverage is 20 times your yearly revenue. At age 70, it can be five times your yearly revenue.

    Keep in mind that these numbers apply to the total amount of coverage you hold, not the coverage per policy. So as long as you don’t go past those values, you can still buy additional coverage.

    If you’re thinking about buying an additional life insurance policy, you may want to contact an insurance agent that can assess your current coverage and guide you in the right direction.

    Brent Roberts
    Brent Roberts
    Passionate about making benefits and insurance easy to grasp.
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