Can You Have More Than One Life Insurance Policy?

On average, Americans die with a debt of $62,000, according to USA Today. Fortunately, a life insurance policy can help you protect your loved ones from drowning in debt after you pass away. So it’s not surprising that one question many people ask is, “Can I have more than one insurance policy?”

The answer to this question is, “Yes — so long as it’s justified.” Life insurance companies will want to know the details of your other policies to make sure that additional coverage makes sense. For example, if you’re a single person with no children or other dependents and you make $65,000 per year, insurers are unlikely to approve you for $2 million of coverage. But if you’re a married parent of two young children with a $450,000 mortgage, an annual income of $150,000 and life insurance coverage of $750,000, buying one or more additional policies makes sense. 

Why Have Multiple Life Insurance Policies?

There are several circumstances in which purchasing multiple life insurance policies is a good idea:

  • If you start to earn more. Obviously, you should never purchase more life insurance than you can afford. However, when you start to earn more, your lifestyle usually adapts, too. This can involve buying a more expensive home or a nicer car — and that often means taking out bigger loans. Additional life insurance policies can provide you with the coverage you need to offset that debt. 
  • If you’re planning ahead and want to save money. Have you calculated that you need $1 million to help your family? Well, they might not need that entire sum, depending on when you’d pass away. If you’re planning to pay off your mortgage within 10 years and expect your children to leave home in 20 years, you could get $500,000 of coverage for 10 years, $300,000 for 20 years and $200,000 for 30 years so your loved ones still receive something after your death.
  • If you don’t want to put all of your eggs in one basket. It’s rare for life insurance companies to go bankrupt, but it can happen. Although there are regulations in place that ensure you keep some of the coverage, there’s no guarantee you’ll retain all of it. Purchasing policies from multiple companies will help you spread the risk. 

Talk With an Independent Life Insurance Broker

If you’re interested in purchasing more than one life insurance policy or if you already have a policy and want to know whether or not you need more coverage, you can rely on the team at Liberty Financial Group to give you objective and accurate information and advice. Our experts can help you analyze your situation and determine which policies from which companies offer you the best coverage for your needs. For more information, contact our offices today.

Sources

https://www.usatoday.com/story/money/personalfinance/2018/09/16/life-insurance-more-than-one-policy/1225886002/