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Understanding life insurance

Multiple Life Insurance Policies - Is that possible?

Your needs may grow and change with life, leaving you with the need for more life insurance to protect your loved ones.

You may wonder if it’s possible to have multiple life insurance policies? The answer is yes! Here we explain some possible scenarios.

Should you consider multiple life insurance policies?

Over time, your financial needs and goals may very likely change. That is why your life insurance coverage could also warrant change, increasing with your assets and responsibilities.

In fact, there may come a time in your life when having a single policy is no longer enough to meet your specific needs and you find yourself contacting a life insurance company for additional coverage.

Having multiple life insurance policies is more common than you might think. For example, you may have a small whole life policy dating back to when you were an infant, and today - as an adult with financial dependents - need a second policy to cover the needs of a growing family. Or, you may have a permanent* life insurance policy to cover the balance of your mortgage, and another small term policy specifically for final expenses.

Another example may be if you have a small life insurance policy through your employer but would like to ensure additional coverage to protect your family and loved ones. That may be another case when more than one policy is needed to provide a level of desired protection.

Owning more than one life insurance policy

Here are some things to consider as you contemplate whether or not owning more than one life insurance policy is right for you.

  • Insurability limits
    There are no legal limits as to how many life insurance policies you can own. However, be certain that the benefits you are applying for are no more than what would be reasonable for a person with your expected income level and assets. In other words, be sure you can afford the expense of maintaining your policies to keep them in-force. Additionally, if you have one policy with a life insurance company and decide that you want more, the insurer may require a medical exam to evaluate your insurability.

    Insurability limits vary by age and by insurer, but generally range from 15 – 35 times annual income. Note that insurability limits apply to the total amount of coverage, not per policy.

Alternatives to multiple policies

If you think you might need additional coverage in the future or find yourself adding and dropping coverage to meet specific needs, you may want to consider including a policy rider when you purchase a policy. For example, a guaranteed insurability rider could give you the option to purchase additional life insurance coverage at a later date, without undergoing a medical exam or providing any evidence of your insurability. Unfortunately, you never know how your health could change. Including this rider can make sense because it could allow you to buy additional insurance at certain intervals, say every few years or at a certain age or life event.