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/
WEB.1932.03.16
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? ›
Yes, you can have more than one life insurance policy at a time. While many people receive enough protection with one policy, obtaining multiple life insurance policies can be beneficial after certain life events, as part of your estate planning, and other situations.
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.
Is there a limit on how many whole life insurance policies you can have? ›
There are no legal restrictions to prevent you from getting more than one policy at the same time. There's a limit to the total amount of coverage you can get, regardless of the number of policies you have. The limit is usually based on your income and age.
Can you have more than life insurance? ›
It's perfectly acceptable to hold life insurance policies with different companies.
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 you borrow against term life insurance? ›
Verify your policy type: Permanent policies generally have a cash value component, while term policies do not. If you have a term policy, you will not be able to borrow against it.
Can I have 4 life insurance policies? ›
There are no limits on how many life insurance policies you may own, and there are some situations where holding multiple life insurance policies may help you plan for your financial future.
What happens if you have two insurance policies? ›
Whenever you make a health insurance claim, your primary insurance plan will act as if you had no secondary plan and provide you with your benefits. Then your secondary insurance plan kicks in and covers the rest of the cost if it's covered and necessary.
Is it illegal to have too much life insurance? ›
There are no laws restricting how many policies you can own, but insurance companies may decline you if they believe you are over-insured.
Unlike term insurance, whole life policies don't expire. The policy will stay in effect until you pass or until it is cancelled. Over time, the premiums you pay into the policy start to generate cash value, which can be used under certain conditions.
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.
Because whole life insurance never expires, you do not need to worry about outliving it. However, your policy may pay out before your death if you live to a certain age. Most whole life policies endow at age 100, while some recently issued policies now offer a maturation age of 121 years.
Can you legally have 2 life insurance policies? ›
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.
What is the highest amount of life insurance you can get? ›
The Guinness record holder: The most valuable life insurance policy ever sold, according to Guinness World Records, is valued at a total of $201 million, on the life of a well-known U.S. billionaire who resides in the Silicon Valley area of California and is actively known in the technology space.
Is there such a thing as too much life insurance? ›
The answer is yes. It's possible to overpay for life insurance or to have too much coverage, but you have plenty of opportunities to avoid overpaying. Saving money on life insurance or avoiding paying for too much coverage starts with smart shopping.
Can you insure your life twice? ›
How many life insurance policies can I have? There's no limit on the number of life insurance policies you can have, but insurance providers will look at your total cover amount.
What's the highest life insurance policy? ›
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 you have too much life insurance? ›
There's no limit to how many policies you can own, but it is still possible to apply for too much life insurance.
Can you cash out a life insurance policy? ›
Can you cash out a life insurance policy before death? If you have a permanent life insurance policy that has accumulated cash value, then yes, you can take cash out before your death.
