The quick answer is yes. You can have many life insurance policies, and they don’t have to be from the same firm. But, more importantly, why would anyone desire to do so? Because purchasing numerous policies will help you ensure that you have adequate coverage to fulfill your loved ones’ needs for as long as they require protection, at a price you can afford. This article will describe how you can have many life insurance policies on one person at the same time.
Can You Have Multiple Life Insurance Policies?
It is conceivable and legal to have many life insurance plans depending on your options and unique coverage requirements. Many people, for example, have life insurance via their job in addition to a personal policy they purchased on their own. This is known as group life insurance.
The only time you can’t buy more than one life insurance policy is if you want more coverage than you qualify for. Most people can only acquire up to 15 times their yearly income in total life insurance coverage.
Otherwise, depending on your position, you can have various life insurance plans that are either term or permanent.
Term life insurance is the most popular type of coverage since it is inexpensive. It is simple and only lasts as long as you need it.
Permanent life insurance, on the other hand, never expires. It is typically more expensive and is best suited for high-net-worth individuals. Some people buy numerous policies that expire as they get older to save money on premiums over time, while others may have a term and a permanent policy.
Here are some instances in which having more than one life insurance coverage may be advantageous.
Can You Have Multiple Life Insurance Policies on One Person?
Yes, you can have numerous life insurance policies on one person. While many people are adequately protected with a single policy. Having numerous policies can be useful after specific life events, as part of estate planning, and in other scenarios.
Life insurance is generally used to provide financial support to your dependents if you die. A single-life insurance policy is usually sufficient, but in a few cases, purchasing numerous life insurance policies may make sense.
However, there are several factors to consider while purchasing numerous life insurance policies. For starters, having numerous plans means paying multiple premiums. Depending on your age and health, you may see a broad difference between the highest and lowest prices if you purchase several insurances at different times.
Applying for several policies may necessitate taking various paramedical tests. These tests are performed as part of the underwriting process. They often include the submission of blood and urine samples, as well as checking your blood pressure and other vitals. While these exams are usually brief, scheduling multiple of them at the same time may be cumbersome.
Related Article: Mazzola Insurance: Best Policy Review 2023
Keeping track of several policies can sometimes be difficult, especially if you use various permanent life plans as an investment instrument. It may raise your chances of missing a premium due date, causing one of your plans to lapse.
Purchasing a home, having a child, or even establishing a business can bring with them additional financial demands that your current policy may not adequately cover. Purchasing a new life insurance policy can assist cover these additional costs. It may also be less expensive than extending the coverage limit on your current policy. However, before purchasing new insurance, you should always get an estimate for additional coverage or consult with your financial counselor.
Income, health, dependents, and occupation will all play a role in determining whether you need greater coverage from various policies. While there are no financial hazards to having numerous policies, you must ensure that you can afford to pay all of the premiums on time and for the duration of all of those policies, or they will lapse and you will lose coverage.
Speaking with an insurance professional is the best method to determine what is best for you. At Policygenius, we have licensed insurance agents standing by to assist you with your application.
What are the Reasons to Get More Than One Life Insurance Policy?
One of the main reasons people buy numerous plans is to supplement an existing life insurance policy. This also comes with additional coverage when their needs change.
For example, many people choose the group life insurance provided by their employer. This is because it is reasonably straightforward to obtain and usually does not have any medical requirements. The disadvantage is that those policies often do not provide as much coverage as you require, and your coverage will be terminated if you leave your employment.
Most people with group life insurance can qualify for more coverage. You’ll need a compelling financial reason to go above a particular level. The following are some scenarios in which increasing your overall life insurance amount makes sense.
Alternatives to Buying Multiple Life Insurance Policies
If you want more coverage but don’t want to apply for a new policy, you can change or increase your coverage directly with your current life insurance provider. You can also do it with the assistance of a Policygenius agent in one of two ways:
#1. Life insurance Riders
Riders are optional add-ons that let you easily alter or add minor amounts of coverage to an existing policy. A child rider, for example, is a low-cost way to provide some coverage for your children.
#2. Boost your death benefit
Many insurance companies include a guaranteed insurability rider, which allows you to increase your coverage level following big life events. You will not have to go through the application process again, and the rider is inexpensive.
Purchasing numerous life insurance policies can be a wise method to obtain additional coverage to protect against a specific debt. An example includes a mortgage, or if you wish to adopt a more intricate financial strategy, such as the ladder strategy. To find the best solution for your situation, see a financial adviser or contact a Policygenius agent.
Some Mistakes Life Insurance Mistakes That You Should Avoid
If you’re looking for life insurance or have previously purchased a policy, make sure you don’t jeopardize your family’s money by making these blunders.
#1. Waiting to Buy Insurance
When acquiring life insurance, it is critical to evaluate both the amount of coverage required and the cost. The cost of life insurance is determined by a variety of criteria, including your age and overall health.
Purchasing a life insurance policy sooner rather than later can work to your advantage if you want to get the best deal available. Rates for life insurance typically rise as people age or their health deteriorates. In addition, illnesses or health concerns may make you ineligible for coverage in some situations. The longer you wait to obtain insurance, the more it will likely cost—if you can buy it at all.
As part of the life insurance underwriting process, you may be required to complete a paramedical exam. This process also includes completing a health questionnaire.
#2. Buying the Lowest-Cost Policy
While it is crucial to look for a policy that is reasonably priced, it is also important to examine what you are getting in terms of coverage. Because life insurance policies can be confusing, it’s a good idea to educate yourself on their features and benefits.
Term life insurance, for example, is less expensive than permanent life insurance. However, there is a catch: term life insurance only covers you for a defined period, whereas permanent life insurance insures you until death as long as your premiums are paid.
If you anticipate you will only require life insurance for a limited time, such as 20 or 30 years. A term life policy may be an affordable option. However, if you desire lifetime coverage or a life insurance policy that generates cash value as an investment vehicle, it may be worth it to spend more in premiums for permanent coverage. Compare the prices of various life insurance policies to see what you might be giving up in exchange for a better deal.
The decision between term and permanent coverage must be made on an individual basis. This should be based on your insurance needs and financial condition. If you get term life insurance and then decide you want lifelong coverage, you may be eligible to convert your policy to permanent life insurance.#
#3. Allowing Premiums to Expire
When you buy life insurance, you must pay a premium in exchange for coverage. Once again, these premiums can be determined by your insurance risk class, which is determined by your age, health, and other characteristics. If you’re thinking about purchasing a universal life policy with secondary guarantees—low-premium guaranteed death payments for life or for a set length of time—a late payment can influence the policy’s benefits.
Universal life is a sort of permanent insurance policy that has been marketed as providing long-term assured protection at the lowest feasible rate. It is not the same as term insurance. While many of these plans include a cash surrender value, universal life with secondary guarantees focuses on providing the most insurance for the least amount of money.
Some of these policies are susceptible to premium payment timing. For example, if you miss a monthly payment or send in your check more than a month late, your guaranteed coverage may no longer be guaranteed. If one payment is late or missed, insurance purchased with assured coverage to age 100 may only give protection to age 92, which could be problematic if you live longer.
If you believe you will be late on a payment, check with your firm; many will allow 30 to 60 days without affecting the policy’s guarantee.
#4. Forgetting Insurance Is an Investment
The Financial Industry Regulatory Authority (FINRA) considers variable life insurance policies to be investments, therefore you should as well.
A variable life insurance policy is a form of permanent policy that provides life insurance with a cash value. A portion of the payment is used to pay for life insurance, while the remainder is invested in various investments comparable to the mutual funds that you select. The value of these accounts, like mutual funds, fluctuates and is determined by the success of the underlying investments. People frequently look to these policy values in the future to boost their retirement income.
A variable life policy must be adequately funded to maximize cash value increase. This includes continuing to make adequate premium payments, particularly during periods of low investment returns. Paying less than you intended can have a significant impact on the monetary value accessible to you in the future. It is also critical to evaluate the performance of your policy and rebalance your accounts regularly, just as you would with any investing account. This can help you avoid taking on more risk than you intended when you set up your account.
#5. Using Your Policy as a Loan
Permanent life insurance plans with cash values may be a source of funds if you need to borrow money. If done correctly, the cash value of a permanent policy can normally be utilized for whatever purpose you see fit, including tax-free withdrawals and loans.
This is a significant benefit, but it must be managed properly. If you withdraw too much money from your insurance and it lapses or runs out of money, all of your gains will be taxable. Not to mention that you may considerably limit the death benefit available to your beneficiaries if you die.
If you have taken too much money out of your policy and it is set to lapse, you may be able to keep it by paying more premiums, if you can afford them. When accessing the cash value of your life insurance policy, keep a tight eye on it and consult your tax expert to avoid any unexpected tax burden.
What Factors Should I Consider When Getting Life Insurance?
Determine how much coverage you require first. There are various general guidelines for determining the appropriate amount of coverage, such as replacing several years of lost income as well as any debts and other commitments you may have now or in the future.
Next, pick if you want term or permanent insurance. Term insurance features lower premiums but has a defined number of years to expire. They also have no monetary worth.
Insurance premiums, regardless of kind, rise with age and are more expensive for individuals in poor health.
The decision to get life insurance is a significant one. Before agreeing to a policy, do your study, carefully read your insurance contract, and comprehend all of its contents. While losing or failing to purchase life insurance would not ruin your life, it will undoubtedly harm the individuals you are purchasing it to protect.
Frequently Asked Questions
How many life insurance policies can you have at once?
There is no limit to the number of life insurance plans you can own, but insurance providers may consider the total amount of coverage you have. As a general guideline, your coverage should not exceed 15 to 20 times your annual salary.
Do you pay taxes on life insurance?
Life insurance benefits received as a beneficiary owing to the death of the insured person are generally not includible in gross income and are not required to be reported. However, any interest you get is taxable and must be reported as such.