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Can You Have More Than One Life Insurance Policy?

By Cameron Goodwin·February 08, 2023·5 Minute Read

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Great news for those looking to fill coverage gaps or make some strategic insurance moves, you can indeed have multiple life insurance policies. But that doesn’t mean you can just go on a life insurance shopping spree. Most life insurance companies regulate the amount of total coverage you can buy, typically limited to twenty to thirty times your annual income.If you are looking for an additional life insurance policy, you can ask your insurance agent about your insurance company’s coverage cap. 

Why Would You Have Multiple Life Insurance Policies?

Just because you can do something doesn’t necessarily mean you should, so you might be wondering why anyone would actually want more than one life insurance policy in the first place.

Most people use life insurance to provide an extra layer of financial protection for their loved ones in case the unthinkable occurs. It’s not an easy topic to broach, but if you were to die, who would take care of the people who depend on you? What would happen with your debt? How would your family cover the cost of your final expenses?

When you buy life insurance, you might find yourself sleeping a little easier at night knowing that if something were to happen to you, there is some financial protection in place. But what happens when you move into a new season of life and your insurance needs change? 

4 Reasons You Might Consider Multiple Life Insurance Policies

Here are four scenarios in which you might find yourself shopping around for an additional life insurance policy:

Your financial situation changes. 

One moment, you’re in your twenties, sharing an apartment with your new spouse and your dog, and then, in what seems like a blink of an eye, you’re a decade older with a mortgage, a couple of awesome kids, and a sensible minivan. Your life insurance needs can (and probably will) change. What happens if the death benefit on your current policy is no longer enough? Can you have more than one life insurance policy? You sure can.

You have strategic financial goals.  

Some financial experts recommend term life insurance because it is a straightforward purchase and typically the least expensive type of life insurance. You pick a term and a death benefit, and as long as you make your premium payment, you are covered for the policy’s term. However, term life insurance doesn’t have the cash value component some permanent life insurance policies offer.

You have group coverage but want an individual life insurance policy. 

If you have life insurance through your employer, it is undeniably an excellent work perk, but the death benefit may not be enough. If you find yourself in need of additional coverage, you may have the option of purchasing supplemental insurance through your employer. Before you go that route, consider that group life insurance may not be portable, which means if you leave your job, you might lose your coverage. If portability is a concern, you could instead purchase an individual life insurance policy.

You want to build a life insurance ladder. 

As you get older, life insurance generally gets more expensive to buy. Some people respond to this with a strategy called laddering, which means purchasing multiple life insurance policies with varying term end dates and coverage amounts. 

Here is an example of building a life insurance ladder: a person who wants $1.5 million in coverage to help cover student debt, a twenty-year mortgage, and to start a college fund for their kids should they pass away. Instead of buying a $1.5 million life insurance policy, they would use a laddering strategy that coincides with their financial situation. They might buy a $1 million policy with a term of ten years, a $300,000 policy with a term of twenty years, and a $200,000 policy with a term of thirty years.

With this approach, they would have $1.5 million in life insurance coverage when they need it, without paying for that coverage when they don’t, all while locking in rates at the time of purchase (insurance rates go up with age).

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The Most Common Types of Life Insurance 

Should you decide to purchase an additional life insurance policy, what type of life insurance should you get?The answer will vary from person to person, andfinancial situation to financial situation. Read through the list of different types of life insurance below and consider talking to a financial advisor about owning multiple life insurance policies.

Term Life Insurance: Term life insurance is the least expensive type of life insurance and a straightforward purchase. Once approved to buy term life insurance, you pick a term and coverage amount, and then you’re all set. This is the most purchased type of life insurance (and the one some financial experts advise purchasing) likely because of the simplicity and price point of the product. 

Whole Life Insurance: Whole life insurance is permanent, there is no term period or expiration date on these types of policies. Whole life is typically more expensive than term life insurance because the policies can be in force until you pass away and typically feature a cash value component. If you’re looking for a policy that you won’t outlive, whole life might be right for you. 

Universal Life Insurance: Universal life insurance, like whole life, is permanent life insurance with a cash value feature. The big difference between the two is that universal life insurance offers a flexible premium.

No-Medical Exam Term Life Insurance

If you’re considering the option of owning multiple life insurance policies, you probably have at least one policy, which means you’re likely familiar with having to take a medical exam, perhaps undergo a phone interview, and wait for a decision to come. 

Bestow does away with all of that and offers no-medical exam term life insurance with a 100% online questionnaire-style application. 

Get a free quote in seconds and apply in a few minutes. Most applicants get an instant decision and, if approved, you could activate coverage that same day. 

Key Takeaways

  • Can you have more than one life insurance policy? Yes, you can have multiple life insurance policies. 
  • Most insurance companies have what is called a coverage cap, limiting the total coverage amount you carry with them to anywhere from twenty to thirty times your annual income, typically. 
  • You can own multiple life insurance policies from different insurance companies, and you can buy different types of life insurance.