While most people can get the coverage they need with a single policy, you can have more than one life insurance policy. You may be wondering whether having more than one life insurance policy makes sense for your needs. In this article, we’ll walk you through the different types of life insurance policies and reasons you might need to have more than one, such as a new family member, estate planning or supplementing your current policy.
What are some reasons to have multiple life insurance policies?
You could need multiple life insurance policies for many reasons, and most of them come down to setting your family up financially once you pass away. Here are some of the most common situations where you may decide to purchase multiple life insurance policies.
Supplementing a current policy. You simply don’t feel your current coverage is enough and you decide to buy an additional policy. One scenario where this makes sense is if you get life insurance through work. Group policies like this are typically not enough coverage to ensure your family is financially protected in the event of your death, so an additional life insurance policy is a way to fill that coverage gap.
Major life events. Your current policy might not be enough to cover everything or everyone if you get married, have a child, buy a new house or start a new business. While all wonderful events, they also expand the list of people and assets you want to protect. A second life insurance policy can help make sure you have the coverage you need.
Long-term financial planning. Using the life insurance ladder strategy to have the most coverage during times when you will have the most financial obligations—children’s education, mortgage, money for a surviving spouse or final expenses—you buy multiple term life insurance policies. Typically this is done with 10-, 20- and 30- year terms so you have the most coverage in the first 10 years, moderate coverage in the second 10 years and the least coverage in the third 10 years when your expenses have decreased.
Estate planning. If you have a whole life insurance policy but want to ensure your family has significant coverage after you pass away, taking out a second term life insurance policy, mainly while your dependents still rely on your income, can be a great way to plan for their futures. This guarantees they will have a financial safety net well into their adult lives.
Long-term care. You might consider having a term life insurance plan that will benefit your family if you pass away while also having a permanent life insurance policy with a chronic or critical illness insurance rider. This will allow you to access your death benefit while you’re still alive to pay for long-term care, if needed. The main benefit of this is your beneficiaries will receive any remaining balance of the death benefit, whether or not you end up needing it for long-term care.
What are the different types of life insurance policies?
There are several different types of life insurance that can be purchased alone or in multiples. If you have similar needs to those above, or have a situation where more than one policy makes sense, these are the life insurance policy options you need to know.
Term life insurance policies are purchased for a certain length of time (the term of the policy). The most common terms are 10-, 15-, 20-, 25- and 30-years. When thinking about the term and amount with term life insurance, you want to consider how much insurance you can afford, who depends on your support and your family’s current and future financial needs=.
Permanent life insurance is a type of insurance, which includes whole and universal life insurance, that covers you without a pre-set expiration date. Permanent life insurance offers insurance coverage for your entire lifetime, as long as premiums are paid, plus a cash value benefit that can be used as a savings or investment component.
Final expense insurance is intended for exactly what it says:to pay final expenses, such as funeral costs, medical bills, credit card debt and any other debts you have at the end of your life. There are three types of final expense insurance: simplified issue life insurance, guaranteed issue life insurance and critical illness life insurance.
Need help deciding if you need multiple life insurance policies? Let SelectQuote help you make the right decision for you.
Renewing your life insurance policy is a big decision, but our licensed insurance agents are here to help. SelectQuote has more than 35 years of industry experience helping customers navigate the life insurance buying process. Our process is quick and easy, using proprietary technology to search life insurance policies from the highly-rated carriers we work with. Whether you have questions about renewing your current policy or want to explore options for switching coverage, we’ll help you find the right fit for your needs and your budget.
