Multiple life insurance policies

Design your own life insurance coverage with the help of multiple policies.

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Life insurance is needs-based. As you move through life, you may see the value in taking out multiple life insurance policies to suit your changing needs. This is a common tactic – but just know that you’ll have to justify the coverage to your insurer.

Can I have multiple life insurance policies?

Yes, it’s legal – and common – to own multiple life insurance policies. Life insurance is flexible, and many people invest in policies with different term lengths and coverage amounts as their needs change.

Reasons for owning multiple life insurance policies

In these situations, it might make financial sense to have multiple life insurance policies:

  • You need more coverage. Let’s say you get married, buy a home or have a kid. Rather than boost the limits on your current policy, you could buy a separate policy to cover those financial obligations.
  • You have several debts to pay. Some people purchase term life insurance policies that are due to expire at the same time as their debts. This is known as the ‘laddering’ strategy. For example, if you have 10 years’ worth of student loans and a 30-year mortgage, you might buy a 10-year and a 30-year policy. That way, your beneficiaries won’t be burdened with your debts if you die prematurely. And if you outlive your term, you’ve hopefully paid off those debts and may not need to purchase another policy.
  • You want to supplement the life insurance you have through your employer. Typically, group life insurance offered by employers caps out at low amounts, like $100,000. If your financial obligations exceed $100,000 and you have the room in your budget, it’s a good idea to buy another policy privately.
  • You want different coverage to meet different goals. The main purpose of life insurance is to replace your income when you die. But there are other reasons why you might want to purchase additional coverage, including estate or retirement planning, protecting a small business, securing a loan, or covering long-term care. Multiple life insurance policies can come in handy in those instances.
  • You’re interested in both term and permanent coverage. On a similar note, you might want to combine a term and permanent policy to a) secure your family’s financial future and b) offer benefits during your lifetime. Permanent policies build cash value over time, and many providers offer added protection, such as critical illness riders.
  • You want to mitigate risk. Most life insurance companies are vetted by financial ratings agencies, which assess their long-term financial health and publish the results. But if you don’t like the idea of relying on one provider to pay out your claim, you could consider buying policies from two or more companies.
  • You can afford additional coverage. Some life insurance is better than none. So, if you could only afford a 10-year term policy at 25, but five years later, you’re in a position to add a longer term or permanent policy to your life insurance lineup, you might do that.

Pros and cons of having multiple life insurance policies

Pros

  • Design your own coverage. Purchase coverage as your family and financial obligations change for peace of mind.
  • Save money over time. By laddering policies, you may end up paying lower premiums than if you purchased one, larger policy.
  • Protect your business and personal life. You can take out policies to cover your family as well as key workers in your business so that the show can go on if they’re unable to work.
  • Diversified coverage.As you learn more about life insurance, you may want extra protection that isn’t offered by your current policy, like a terminal illness rider, disability protection, or accidental death and dismemberment coverage.

Cons

  • More admin. Some customers complained about low-quality clothing.
  • Several premium payments. You’ll need to stay on top of your premium payments each month, and they might have different due dates or amounts.

Is there a limit to how much life insurance coverage I can buy?

Life insurance companies don’t have specific limits on how much coverage you can buy – it just has to be reasonable. When you apply, the insurer will ask about your current coverage, income and assets. If the total coverage would exceed 20 to 30 times your income, this may raise a red flag. Otherwise, as long as they think you have an insurable interest and can afford the repayments, you shouldn’t have a problem.

Legally, life insurance companies have to share information about applications with the Medical Information Bureau (MIB). This process benefits both you and your insurer: it helps to prevent fraud, and it also ensures that multiple companies aren’t insuring you beyond your reasonable limits.

Will additional policies payout benefits in a claim?

Yes. You can receive payment from both policies if you satisfy the conditions of both policies.

Compare life insurance providers

Name Product Issue Ages Coverage Range Medical Exam Required State Availability
18 - 85 years old
$10,000 to $10,000,000+
Depends on provider and policy
All 50 states
Compare quotes from 16 life insurance companies side by side.
18 - 75 years old
$100,000 to $10,000,000
Yes
Get a term life insurance quote from this A+ rated company, founded in 1875. Customize your policy with additional life and disability riders.
18 - 64 years old
$100,000 to $3,000,000
No
All 50 states
Customized term life insurance policies up to $3 million, no medical exam required.
20 to 60 years old
$100,000 to $8,000,000
No
Not available in New York
Term life insurance with no policy fees and the freedom to cancel anytime. Simple application process that can get you approved for coverage instantly.
25 - 60 years old
$100,000 to $5,000,000
No
Available in all states except for Montana
Offers term life insurance with accelerated underwriting. No-exam coverage up to $1,000,000 for those who qualify.
20 - 80 years old
$25,000 to $10,000,000
No
All 50 states
Quickly get a quote for coverage with this marketplace, which compares term & whole life insurance policies from 45+ carriers.
20 - 85 years old
$100,000 to $1,000,000
Depends on policy
All 50 states
Get a term or whole life insurance quote from Fidelity Life - starting as low as $15/day.
18 - 80 years old
$50,000 to $25,000,000
Depends on provider and policy
All 50 states and D.C.
Get a quote within minutes from more than a dozen insurers.
21 - 54 years old
$50,000 to $1,000,000
No
Not available in Alaska or New York
Affordable 2-, 10- and 20-year term life insurance policies. Instant quotes and no medical exams.
eCoverage
eCoverage
25 - 83 years old
$25,000 to $1,000,000
Depends on policy
Get a term life quote from eCoverage - starting at as low as $15 per month.

Compare up to 4 providers

Multiple life insurance claims

Provided that your claim satisfies the terms and conditions in the policy, there should be no reason why you can’t file your claims on multiple life insurance policies. However, it’s important to remember that the eligibility of the claim will be determined by each individual insurer who will likely have their own specific set of rules and regulations.

Consult both insurers before you apply

It’s essential to consult with the individual insurance providers to get a clear understanding on whether or not you may be able to obtain additional life insurance policies. They’ll also be able to provide more information about any implications if you own multiple life insurance plans.

Can I nominate multiple life insurance beneficiaries?

Yes. Most insurance providers will allow you to nominate multiple beneficiaries in the event of a life insurance claim — the number of beneficiaries you have may vary between providers.

Common life insurance beneficiaries are your partner, spouse and or children. However it’s not uncommon to have a beneficiary be other family members, such as siblings or aging parents, business partners or other individuals who are financially dependent on you.

How to split up what’s paid to your beneficiaries

You’ll have to determine a percentage split for your beneficiaries — this’ll determine who gets what share of the benefit.

It’s important to keep your nomination current to account for any circumstantial changes such as separation, divorce or death. This will ensure that the benefit doesn’t end up anywhere other than with your intended recipients.

Case study: How a $500,000 life insurance payout is split

Name of the beneficiaryDate of birthRelationship% SplitBenefit received
James Doe5/25/2005Son40$200,000
Judy Doe8/15/1982Wife40$200,000
Darren Brown6/12/1975Business partner20$100,000

Bottom line

Life insurance isn’t a cookie-cutter product. The amount of life insurance you buy should be driven by your financial needs – whether that’s a family, a home, or a business. If your needs change, you might consider purchasing multiple policies to cover them. To make sure you’re squeezing the most value from your policies, compare life insurance providers.

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