Life insurance can be an interesting thing. There are many rumors and misunderstandings that surround it. Do only breadwinners need coverage? Are my premiums deductible? Am I better off investing my money? However, there seems to be one question in particular that has many people feeling lost: can/should I have more than one life insurance policy? The simple answer to this question is yes, with a few limitations.
While insurance is heavily regulated, it is completely legal to own more than one life insurance policy. It is, in fact, a common practice of those with knowledge of the insurance industry. The restriction doesn’t lie in how many life insurance policies you own, rather in how much coverage total you have compared to your assets, income, and other financial responsibilities. When you apply for a life insurance policy you must disclose to the insurer all coverage you have, and possibly justify why you feel you need to coverage you’re requesting. In general, these limitations are considered generous and most people won’t run into an issue acquiring multiple policies.
With that being answered, the natural next question to ask is “Should I, though?” While the answer will vary for every person and their situation, most would benefit from having multiple policies. Many life insurance policies complement each other, such as final expense policies and term life policies.
Let’s use a few examples: Suppose a mid-age husband and father seeks coverage. He may elect to purchase a larger term life insurance policy should something happen to him over a set number of years, while also taking out a smaller but permanent final expense policy to assist his family with covering funeral and burial costs. Let’s say a mother initially took out a life insurance policy when it was just her and her husband, but now has added children to the family and has determined that her current coverage isn’t enough? She may elect to take out an additional policy to increase her total coverage. Since there isn’t a limit to the number of policies you can take out, it is easy to combine policies to create the coverage that you need.
It’s important to remember the purpose of life insurance. Should something happen to you, the last thing that you would want is for your family to be put in a difficult financial situation. Oftentimes, having a single policy isn’t enough to cover the everyday expenses like a mortgage, daily necessities, or educational expenses. Make sure you consider the benefits of multiple coverage while doing your financial planning. Should you have any questions or thoughts about taking out additional life insurance policies, reach out to a trusted insurance agent or insurer. Doing so now may make a world of difference when it counts.
Blog written by: Andrew Jordan, Creative Marketing Specialist II for Sentinel Security Life Insurance Co.