Can You Have More Than One Life Insurance Policy?

One of the best ways to financially protect those you love is to buy adequate life insurance coverage. Both short- and long-term policies can replace your income if you were to suddenly pass away, as well as provide for your loved ones’ needs.

But once you’ve purchased a life insurance policy, is there ever a reason to buy another one? Today, let’s talk about whether or not you can have more than one life insurance policy, and why you’d want to in the first place.

Can You Have Multiple Policies?

The short answer is that yes, you can definitely have more than one life insurance policy. In fact, you can have a combination of term and permanent coverage, a variety of term policies, and even a blend of individual and workplace protection. 

Personal factors may dictate what you can buy and when. For example, your age, health, and even your income may limit the number of life insurance policies you can buy and how much total coverage you’re allowed to have at a given time.

Why You Would Want Multiple Life Insurance Policies

There are a few good reasons you might find yourself shopping around for a second (or even a third) life insurance policy. 

You Decide That You Need More Coverage

Life has a way of changing from one year to the next, often in unplanned ways. Because of this, you may find yourself needing more life insurance coverage even after you’ve already bought a policy that you thought was adequate.

For instance, you may buy coverage only to unexpectedly have a(nother) child. You could also have a loved one, such as a spouse or child, develop a permanent disability that will require lifelong support. In either of these cases, the coverage you bought years ago might not be enough.

You Have Short-Term Obligations

A second life insurance policy can be used to cover short-term obligations, while a longer-term (or permanent) policy can protect your loved ones for life.

If you have 20 years left on your mortgage, for example, you could buy a term life policy that protects your family until the loan is paid, while also maintaining a whole life policy that covers everything else (link: leaplife.com/how-long-should-term-life-insurance-be text: for much longer). 

Your Employer Offers Coverage

Definitely take advantage of any employee-sponsored policies offered to you (especially those that are free), but also consider keeping your own term or whole life policy on the side, to protect your loved ones no matter what happens with your job.

You Have a Complex Financial Strategy

You can purchase multiple life insurance policies — such as term coverage in different lengths — in order to protect various assets or a specific financial situation. By buying policies early on, you can also lock in the best possible rates while strategically accounting for changing financial needs.

For example, you can “ladder” your life insurance coverage, buying a 30-year, 20-year, and 10-year term policy. The 30-year policy might be designed to replace your income until your spouse reaches retirement age, the 20-year term policy could protect your children until they go off to college, and the 10-year policy may provide additional protection until a shared debt is paid off. 

Over time, as your needs drop off, so do the shorter-term policies.

You Can Leave a Lasting Legacy

Life insurance is, first and foremost, a great way to provide financial security to those you love most. But it can also be more than that, allowing you to leave a lasting legacy long after you’re gone.

You can always buy life insurance coverage that protects your family’s needs, either permanently or for specific seasons of life. On top of that, though, you can utilize additional policies to secure charitable contributions to your favorite causes, establish an endowment at your alma mater, or fund college tuition for your grandchildren and great-grandchildren. The options are endless!

Things to Keep in Mind

While you can generally purchase more than one life insurance policy without a problem, your total coverage amount may be limited by things like your income or your age. Be sure to disclose any other coverage you may have when applying for new policies, and be prepared for possible asset-based limits on coverage.