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 lifepolicy 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 policyto 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 riderwhen 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 insuranceat certain intervals, say every few years or at a certain age or life event. With the guaranteed insurability rider, the life insurance company will offer you the additional coverage regardless of your health. It'simportant to note that you'll be paying premiums that reflect your current age when purchasing your additional coverage.
Here is a list of questions to consider when thinking about increasing life insurance coverage, whether through another policy, a rider, etc**:
- Have I experienced life events recently that have increased my need for life insurance? (These may be milestones like getting married, having a child, etc.)
- Are there additional financial burdens that my family has undertaken that life insurance could help protect? (Purchasing a new home, enrolling a child in college, caring for an elderly family member, etc.)
- Has my income or work situation changed creating more annual income than I was bringing in when I first signed up for life insurance?
While not an additional policy, if you havea term life policy, it may have included a term conversion rider. With this option, you could convert a portion of your term policy every few years as outlined in your contract, into permanent life insurance (such as whole or universal life) without undergoing a medical exam. Depending on your policy, you'll most likely have a deadline as to when you must use this option without being subject to an exam, so check your policy.
The bottom line is that there are many different types of life insurance policiesbecause people have different needs. For this reason, it's essential to review your coverage on a regular basis to make sure that what you have is keeping up with you!
*As long as required premium payments are timely made.
**https://www.forbes.com/advisor/life-insurance/more-than-one-policy/
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FAQs
The answer is yes: You can have multiple life insurance policies, and some people choose to keep more than one policy to provide additional financial security in the event of an unexpected death. Of course, there are both pros and cons to having more than one life insurance policy.
Is it possible to have multiple life insurance policies? ›
While you can buy multiple life insurance policies, the total number you can have often depends on the coverage amount. Many life insurance companies will deny additional applications if they believe you're overinsured.
How many life insurance policies are you allowed to have explain your answer? ›
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.
Can you have more than life insurance? ›
Multiple policies, multiple providers
If you want to take out extra life insurance cover, you don't have to stick with your current insurer. You can have multiple life insurance policies with multiple different providers.
What not to say when applying for life insurance? ›
LYING ABOUT DRUG USE OR TOBACCO & ALCOHOL USE
An applicant for life insurance must disclose lifestyle habits, good and bad, including use of alcohol or use of tobacco.
Can life insurance be stacked? ›
After all, the coverage needs you had when you originally purchased your policy may have changed over time. You want to make sure that you're prepared for these changes so that your loved ones stay protected, and stacking life insurance policies can help and can even lower the cost of your life insurance over time.
Can you borrow against term life insurance? ›
Life insurance loans are only available on permanent life insurance policies — such as whole life and universal life — that have a cash value component. You likely can't borrow against a term life insurance policy since it probably doesn't have cash value. Learn more about term vs. whole life insurance.
What are the 3 limits of insurance policies? ›
Types of Insurance Policy Limits
- Per-occurrence limits: The maximum amount an insurer will pay for a single event/claim.
- Per-person limits: The maximum amount an insurer will pay for one person's claims.
- Combined limits: A single limit that can be applied to several coverage types.
We've set a new Guinness World Record for the most valuable life insurance policy ever sold, worth US$250 million. Issued and fully underwritten by HSBC Life, our insurance business in Hong Kong, it was taken out by an individual customer earlier this year.
Can I upgrade my life insurance? ›
If your life insurance policy doesn't match your coverage needs, you can get additional insurance by converting your term policy to a whole life policy or buying a new one altogether.
How Long is the Waiting Period for Life Insurance? The waiting period for life insurance is 2-years long from the policy effective date. If the insured dies within the 2-years, the beneficiary may only receive the premiums paid plus interest, a percentage of the death benefit, or no payout at all.
How many years of income should life insurance replace? ›
Based on the value of your future earnings, a simple way to estimate this is to consider 30X your income between the ages of 18 and 40; 20X income for age 41-50; 15X income for age 51-60; and 10X income for age 61-65.
What life insurance never increases? ›
Whole life insurance offers more stability.
Your family will always get the amount you set your policy for at minimum. There's also the potential for dividends to increase the amount of coverage over time. Your premiums will also never change.
Who gets denied life insurance? ›
Life insurance applications can be denied due to health conditions, high-risk occupations or hobbies, lifestyle factors, financial considerations and age or life expectancy. It's possible to challenge a life insurance denial by writing a well-structured appeal letter and reapplying.
What life insurance doesn t ask questions? ›
Aflac Offers No Medical Exam Life Insurance
At Aflac, you may be able to get a term or whole life insurance without medical questions or exams.
Does life insurance verify income? ›
Financial situation
The insurer may ask questions about your income, net worth and assets. This is to ensure you can afford to pay the premiums to maintain your life insurance, and that the amount of coverage you're applying for makes sense.
Can there be 2 owners of a life insurance policy? ›
A couple – married or otherwise – has another option: Instead of buying separate individual policies, they can buy joint life insurance. While joint policies aren't as popular as individual policies, this type of coverage can be an option to consider for people with certain types of needs.
Why do life insurance companies ask if you have other insurance? ›
Life insurance companies ask about other insurance policies to assess the overall risk they are undertaking when insuring an individual. Knowing about other policies helps insurers determine the policyholder's financial exposure and ensure that the coverage amount is appropriate.
