When should you consider carrying multiple life insurance policies?
Life insurance coverage is traditionally used as a way to support your dependents financially when you pass away. Having one life insurance policy is usually enough to accomplish this, but there are a few situations where buying multiple life insurance policies may make sense:
Major life events
Buying a house, having a child, or even starting a business all bring new financial obligations that your current policy may not fully cover. Buying a new life insurance policy can help cover these new expenses, and may even be cheaper than increasing the coverage limit on your current policy. But you should always quote out the additional coverage, or consult your financial advisor, before buying a new policy.Major life events are also a good time to conduct a life insurance policy review.
Estate planning
Carrying both a term and permanent life insurance policy can be beneficial for estate planning. Instead of carrying more coverage on your permanent life policy, you can take out a separate term life policy to cover your family while they still depend on your income. You can then use your permanent life policy to leave your family with some money after they no longer depend on you financially.
Long-term care
In a similar vein, it may make sense to have one life insurance policy that covers your dependents and a separate life insurance policy that includes a long-term care rider. A life insurance policy with a long-term care rider allows you to use the death benefit to pay for your care as you get older. The upside is that if you end up not needing long-term care, your beneficiaries will get the full payout.
Learn more about life insurance riders.
Long-term financial planning
Buying multiple term life insurance policies that end in 10-, 20-, and 30-year term lengths could potentially save you more on premiums than if you were to buy one policy with more coverage. The idea is that you carry more coverage on the 10-year term policy than the 20-year, and more on the 20-year policy than the 30-year. For example, if you need a total of $750,000 of life insurance over 30 years, you could structure your policies like so:
- 10-year term life policy: $400,000
- 20-year term life policy: $200,000
- 30-year term life policy: $150,000
This strategy, known as laddering, provides you with more coverage earlier in life when you have major expenses, such as child care, and less coverage later in life when you have less debt and fewer expenses. In this example, you would have $750,000 in total coverage for the first 10 years, then $350,000 total for the next 10 years, and finally $150,000 in the last 10 years of coverage.
Important note: Adopting the ladder strategy requires a lot of management. If you're interested in pursuing this strategy, you should consider hiring a financial advisor instead of trying to tackle it yourself.
Common questions about multiple life insurance policies
Is there a limit on how many life insurance policies you can have?
While you can buy multiple life insurance policies, the total number you can have often depends on the coverage amount. Many life insurance companies will deny additional applications if they believe you're overinsured. Your assets, liabilities, and income will often dictate just how much coverage you're allowed to obtain.
Should married couples carry multiple life insurance policies?
Married couples should consider multiple policies if they have dependent children or one spouse relies on the other's income. You can either buy joint life insurance or two separate life insurance policies when shopping around. The joint option is a permanent policy that provides coverage to both spouses, known as survivorship life insurance. With this type of policy, the death benefit is paid out to your beneficiaries only when both you and your spouse have passed away. The cost difference between a joint policy and two separate policies can vary, so it's best to get quotes or talk to your financial advisor or insurance representative first.
Is it legal to apply for life insurance through several insurers?
Even though you can apply for numerous policies simultaneously, it may not be the best course of action. Nearly all insurance companies share the same database to track records and applications. If you apply with multiple insurers at the same time, it may appear as if you're trying to overinsure yourself. That could result in some or all of your applications being denied. Working with an insurance agent or financial advisor can help you avoid that scenario. Likewise, buying multiple policies from the same insurer can be easier than buying them from different companies.
How to get life insurance with Progressive
You can get a life insurance quote online. You'll be asked some questions, and then you'll choose your coverage amount, term length, and other policy details. You can also call 1-866-912-2477 to speak with a licensedProgressive Life by eFinancial representative who can help you find the right policies for you.
