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  • Writer's pictureWing Chan

Can You Have Multiple Life Insurance Policies?

Updated: Oct 10, 2023

Are you allowed to have more than one life insurance policy? Can you take out multiple life insurance policies? Yes. This doesnt just apply to couples whove looked at their partner and asked, Can we have multiple life insurance policies between us? The answer is yes there, too, but even individuals can have multiple life insurance policies. The death benefits of each can stack, and they wont cancel each other out. There is a caveat here, though. There are limits to the amount of life insurance coverage you can buy. Insurance companies dont care about how many policies you have, but they are concerned with your overall policy benefits. Each life insurance policy comes with a death benefit, or the amount your loved ones get from the policy when you pass away. This death benefit is supposed to support their transition to life without you, not give your family a means to get rich overnight. And thats why theres a cap to how much life insurance you can get.

The limit on multiple life insurance policies To make sure your total death benefit is in line with your familys actual financial needs, pretty much all life insurance companies are part of an organization called the Medical Information Bureau, or MIB. They all share information within that group, including specifics on how much life insurance you have with them. Generally, the amount of coverage you can get roughly corresponds with your age and income level. If youre under age 40, you can probably get life insurance death benefits totaling around 30 times your income. As you get older, insurance companies start to rein in that limit. By the time you hit 60, your death benefit limit might be closer to five times your current income. Can you get multiple life insurance policies? Absolutely. But if you apply for policies with a total death benefit well exceeding the limits we just discussed, your applications will most likely be denied. Thats part of the reason some people answer no to questions like, Can I take out multiple life insurance policies? If you apply for life insurance with the full benefit you want with two different companies at the same time, they might think youre trying to get way more coverage than you need and deny you. Actually, though, theyre not denying the multiple policies, but the overall death benefit.

Can you have multiple term life insurance policies? Again, yes. In fact, you could have two term policies, three term policies, or even four or more term policies. The insurance companies really dont care how many policies you have or their type, theyre just tracking your overall death benefit to make sure it doesnt get too high. But can a person have multiple life insurance policies of different types? For sure. Assuming youre staying below the applicable death benefit limit, you could pair a term life insurance policy and a whole one.

Can you have multiple life insurance policies with multiple insurance companies? Whether youve got group life insurance through your employer or you have a policy youve had since infancy, you might be wondering if youre stuck with the company underwriting your first life insurance policy. While you can stay with them (its an option to have two policies with the same company), you can also shop your options with other insurance providers. You can hold multiple life insurance policies with multiple different companies. The trick here is staying on top of managing each policy. Specifically, you want to be extra diligent about paying the premiums for each policy on time. If you miss a payment, that policy can lapse, leaving your loved ones without coverage. Managing multiple policies with multiple companies might be more work, but it also gives you the flexibility to find the best life insurance provider for your needs right now. For example, if youre relatively healthy, you might want to choose a company that can help you see savings for your positive lifestyle choices, like our quick, easy life insurance at Sproutt .

Does it make sense to have multiple life insurance? Is it legal to have multiple life insurance policies? Yes. But is it good to have multiple life insurance policies? The answer here is contingent entirely upon your unique financial situation. But its well worth sitting down, looking over your finances, and asking yourself, Should I have multiple life insurance policies? You can take out multiple life insurance policies to cover specific financial obligations, for example. You might get a 30-year term policy to cover your 30-year mortgage and a 20-year term policy to cover the remaining years you expect to pay for your kids. You can also blend types of life insurance. You could get a term policy that could expire when youll be finished with your mortgage, for example, with a whole policy to stay in place for your lifetime to cover your funeral expenses. In fact, theres a specific strategy you can use to combine multiple life insurance policies to meet your specific needs. Its called the ladder strategy.

The ladder strategy This strategy basically involves stacking different policies on top of each other to meet your changing needs. Lets lay out an example with three policies:

beneficiary on each policy, you should be able to receive the policys death benefit when the insured passes away. Ultimately, you can have multiple life insurance policies and you might benefit from stacking your coverage. For help determining the right policy or policies for your loved ones present and future needs, contact our life insurance experts at Sproutt.

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