Can You Have Multiple Life Insurance Policies?

Life insurance acts like a savings account for your loved ones. As you continue paying your monthly premium, your spouse and children receive benefits upon your demise that help them with funeral costs and other outstanding debt. But if your life insurance won’t pay out enough, can you have multiple life insurance policies?

Fortunately, not only is this possible, but it’s a common route many individuals take to ensure their families receive the care they need after their (the policyholder’s) death.

Union Risk Services is a top life insurance provider in Millburn, NJ, with years of experience helping our clients find the best customized solutions, programs, and policies while building their financial portfolios. Below, we’ll explain multiple life insurance policies and their benefits.

When Do Multiple Life Insurance Policies Become Necessary?

Life insurance policies are primarily meant to act as income replacements if something happens to the policyholder. The beneficiaries receive financial assistance when the policy pays a one-time lump sum. But as the insured, always monitor the available death benefits and current features you can use so you can add or eradicate as you deem fit.

Major Events Have Occurred or Changed In Your Life 

Let’s say you purchased a certain level of protection for your spouse after getting married, but now you have two children. If you were to die, your family would need additional funds to stay afloat with educational fees, college tuition, and other child-related costs. You’ll need more death benefits than before, so apply for another life insurance policy (even if it’s from a different company).

Similarly, if your children move out within the next few decades, they’re no longer your dependents. You can then drop a policy or lower the death benefit so you’re only paying premiums on a necessary amount.

Other Examples of Major Events That Change Your Needs

Many individuals who wonder, “Can you have multiple life insurance policies?” might be facing other major lifestyle changes, like purchasing a home. Because a house comes with repairs, renovations, and a large mortgage, you’ll have more debt than before. Luckily, your family can handle it without you if you have multiple life insurance policies paying out a larger sum.

You should also consider two or more policies if you:

• Left your job or plan to do so (you may not be able to keep your policy if you change companies, so plan accordingly)
• Lost a working family member and need more annual income
• Got remarried and want separate policies for the children of each marriage
• Are in a good state financially but know that your family may struggle with final expenses when you die (final expense insurance covers medical bills, funeral services, and burial costs)

You Want to Take Advantage of Policy Features While You’re Still Alive

Each policy has unique features you can take advantage of while still alive. For instance, with term life insurance, you have a smaller monthly premium but these policies don’t accumulate cash value. That’s because these policies don’t guarantee a payout, especially if the policy’s 10, 15, or 30-year lifespan ends before the insured dies.

With a universal or permanent life insurance policy, a portion of each premium payment goes toward the insurer, your savings portion or cash value (which term policies don’t have), and your death benefits. Borrow against this cash value to pay future premiums and other debt or cash out the entire policy.

How Can You Layer Your Insurance Policies?

Now that you understand how multiple insurance policies can assist you and your loved ones, how do you layer a new policy onto your current one?

Supplementing Permanent Life Insurance with a Term Policy

Certain factors in your life you may want to protect indefinitely while other things you only need to protect for a certain time. For instance, you’ll likely take out permanent life insurance so your spouse doesn’t lose half or all the household’s income when you die.

When considering present or future children, you’ll want to take out a larger policy to cover them, too, but permanent life insurance costs more than term life. So, instead of paying for a large whole or universal policy, obtain a small one instead and place your children on a separate, cost-effective term life policy, especially since they won’t need your protection forever.

Adding to Your Existing Work Policy

So, can you have multiple life insurance policies if you already have a work policy? If you’re part of an employee’s compensation and benefits package, that group rate covers you at an affordable price. However, if this term policy doesn’t offer enough coverage, add another term policy to make up the difference or combine it with a permanent policy for cash value and guaranteed long-term protection.

An add-on policy also helps if your work policy isn’t portable and you lose it if you leave your current job.

Combining Term Policies

If you currently have term life insurance but it’s coming to an end, you may want to renew it so you can maintain coverage for yourself, protect your family, and ensure that you won’t lose all your benefits. However, taking out a second term policy and laddering them proves cheaper than a renewal.

For instance, if you have a 30-year policy and at the 25-year mark, adding a new one now keeps you from paying a higher premium on your original policy after it expires. This early intervention can also mean better results from a medical exam since your health can deteriorate by the 30-year mark, so you can lock in lower rates now. Moreover, if you don’t need both policies, drop the first after getting the second.

Take the Risk Out of Insurance Policies with Our Help!

Whether you need help getting life insurance when you have health problems or simply want to know, “Can you have multiple life insurance policies?” we’re the team for you. At Union Risk Services, our specialized team has been helping individuals and business owners gain life, property, and captive insurance (among other policies). So, call 718-370-3131 in Millburn, NJ, to get started today!