Choosing a life insurance policy can be overwhelming. After you’ve decided on one, your plans may change down the line. This could be due to your financial situation, or family needs. It’s possible that at some point you may even consider having multiple life insurance policies.
Now, the question is, can you have more than one life insurance policy? Simply put, yes, you can. Whether you choose to do this or not depends on the type of life insurance policy you already have, and whether you plan to use it while you’re alive.
Let’s not get too bleak here. Life insurance doesn’t have to be a sad topic. We’re going to discuss how having multiple life insurance policies works, and why it may be a good idea for you and your family.
What is Life Insurance?
To start, we need to understand what life insurance is. Life insurance policies are there to protect you and your family from the unexpected. There are two main types of life insurance: term life insurance and whole life insurance.
Term Life Insurance
Term life insurance is also considered temporary life insurance. It will only cover a certain span of time, and has an expiration date. This type of life insurance is typically only used if you die before it expires. Your money goes to who you’ve left it to and covers death expenses. Keep in mind that if you don’t pass during the length of the policy, it expires.
Whole Life Insurance
Whole life insurance is a life insurance policy that won’t expire. It will be payable as soon as you die, and you can also take out part of the policy as cash value while you’re still alive. It’s a versatile policy that can benefit you while alive, and after you’ve passed.
Do I Need More Than One Life Insurance Policy?
Typically, life insurance is purchased if your death would be a financial burden to your loved ones. Ideally, one policy should be enough to cover the expenses and help your family if needed when you’re gone. So the question of whether you need more than one life insurance policy is going to be up to your needs.
Many people decide they want to purchase another life insurance policy during a life change that could affect them financially, such as:
- Having a baby
- Getting married
- Buying a house
- Starting a business
Why Would I Want Multiple Life Insurance Policies?
Before deciding whether you’ll need multiple life insurance policies, you’ll need to look at the one you already have. For example, you may have a life insurance policy that was purchased for you when you were a child. Now you have three children, and a spouse that you’ll be leaving behind. A life insurance policy taken out for one person likely won’t be enough for a family with three dependents to cover all expenses.
So, usually, you’ll get another life insurance policy if you experience a huge life change like having children or buying a house. You may also decide to purchase another policy if your current one is a term policy getting close to expiration.
How Many Life Insurance Policies Can You Have?
Technically, you can have as many life insurance policies as you’d like. There are no legal restrictions, but people generally stick to having two. When you speak with an agency about purchasing another one, they will check to make sure that you don’t go over your insurability limit, which is usually around 20 to 30 times your annual income.
Another thing to keep in mind before going crazy with multiple life insurance policies is whether or not you can afford them. Just like all insurance policies, they come with a premium that you’ll pay monthly. Make sure that you’re taking out reasonable amounts for your income and assets.
What are The Alternatives to Buying Multiple Life Insurance Policies?
If you find yourself in a position where multiple life insurance policies would be beneficial, it’s important to do your research. There are alternatives to look into, as well.
One alternative to multiple life insurance policies is a policy rider. A policy rider is a provision that can add benefits to your current insurance policy. A rider comes at an additional cost, but could be a more affordable option than buying a whole second life insurance policy.
When you purchase your initial life insurance policy, ask your agent about a guaranteed insurability rider. This policy provision gives you the ability to increase your existing life insurance policy death benefits without enrolling in a new policy. You also won’t have to go through re-qualification procedures such as medical testing.
Another type of policy rider is a term conversion rider. This applies to term life insurance policies. If this rider is included in your policy, you could use it to turn part of your term policy into a whole life policy. This can be done every couple years, depending on your contract. Be sure to talk to your agent on how this would work with your specific policy.
Sign Up for Life Insurance With G&G
The bottom line is that yes, you can have more than one life insurance policy. Whether it’s necessary or not is up to your specific needs. It’s important to speak with an insurance agent to ensure you’re making the right choice for you and your loved ones.
If you’re ready to sign up for a life insurance policy, the team at G&G Insurance is here to help! Contact us today for a free quote, and let’s get started!