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Can you have more than one life insurance policy?

Yes, it is possible to have more than one life insurance policy. In fact, owning multiple life insurance policies vs. just one single policy is often the preferred way to go for many people! This is why we wanted to take a moment and discuss the top 7 reasons why someone might want to own multiple life insurance policies on themselves vs. just having one single life insurance policy.


Top 7 Reasons to Own Multiple Life Insurance Policies.

#1. You need more insurance.

As one grows older, it’s not all that uncommon for a person who already owns a life insurance policy on themselves to realize that the coverage that they have in place isn’t going to be enough. This is particularly true if the person in question first purchased their original life insurance policy in their 20s or 30s.

Now…

This increase in “need” may because their family has grown, or they’re not making more money, or maybe just because you grossly underestimated their original need earlier in life.

Regardless of the reason, what remains clear is that they now want and need more insurance.  

And… 

In most cases, the most affordable way to acquire additional coverage is to first keep their existing coverage in place and apply for a new life insurance policy, which can increase their overall coverage amount.

This is often…

The most affordable way to add additional coverage because one’s AGE is often the number one determining factor for how much one will need to pay for their coverage which is why it’s often best to keep one’s existing policy in place because it was purchased when you were younger.

#2. Multiple Life Insurance Policies as a strategy.

Sometimes individuals will choose to purchase multiple life insurance policies for themselves as a “money-saving” strategy. A strategy that is often referred to as “laddering” coverage. In situations like these, an insured may realize that over the next 30 years, they will need about 500,000 dollars in coverage to protect their family. The only problem is that they don’t actually need 500,000 dollars in coverage for that entire time because some of their insurance needs will decline as time goes by.

For example…

Let’s take a look a married individual in their mid-40s with two children ages 10 and 14 who believes that they need a total of 500,000 dollars in coverage to protect his or her family adequately. In a situation like this, it is reasonable to assume that this person’s insurance needs will be at their greatest for the next 10 to 15 years while their children are still financially dependent upon them.

Then once the children are grown, and on their own, this client’s insurance needs will likely decrease dramatically. For this reason, it may make more sense financially for this client to purchase two separate life insurance policies totaling 500,000 dollars in coverage with differing term lengths. Perhaps a 15 year $250,000 term life insurance policy and 30 year $250,000 term life insurance policy.

This way…

During the time when their insurance needs are at their greatest, the insured will have a full $500,000 in coverage, and then when their insurance needs decrease, half of that coverage will expire, saving them the need to continue to pay for coverage that they no longer need!

#3. Collateral for a small business loan.

Sometimes an individual may find themselves in a situation where as part of a loan application, they need to purchase a corresponding term life insurance policy that can be used as collateral while the loan is being paid back.

Now…

In cases like these, it may not always be necessary to purchase a new life insurance policy if someone is willing to make changes to an existing policy that they already have in place in place, however, in our experiences, when someone does already have an existing policy in place, they tend to like to leave that one alone and just buy a separate policy that will be specifically designed to meet whatever the requirements dictate.

In cases like these, we also like to look at no medical exam life insurance policies since these types of life insurance policies will usually have a faster approval process, allowing one to qualify for their loan sooner.

  1. Buy/sell agreement.

Individuals may also choose to purchase a separate life insurance policy aside from the one that they have specifically designed to help protect their family to finance a buy/sell agreement between partners in a business. This way, should anything happen to one business partner, the surviving partner will receive enough money to “buy out” the surviving partner’s family so that the business can move forward with just the surviving member in charge.

Life insurance policies purchased for these purposes can ensure that the surviving members of a business partnership are adequately compensated for their loved one’s portion of the business without putting additional financial strains of the existing business. They’re also a great way to ensure that both partners feel that their loved ones would be financially protected in the event that they died prematurely.

  1. Need a policy to satisfy a divorce decree.

Sometimes it will be a judge who decides that someone may need to purchase a second life insurance policy on themselves so that the agreed divorce settlement can be protected. This way, one spouse can ensure that any agreement on alimony or child support payments will be protected or “insured” if the individual responsible for making these payments dies prematurely.

Applicants looking for a life insurance policy, for this reason, may also want to see if they can qualify for a no medical exam life insurance policy since it may speed up the process of finalizing their divorce.

  1. Looking to take advantage of certain tax-saving strategies.

Individuals will also choose to purchase multiple life insurance policies for themselves to achieve different goals. For example, someone may choose to purchase an inexpensive term life insurance policy for the sole purpose of obtaining an adequate “death benefit” for their loved ones in the event that they die prematurely while simultaneously purchasing a whole life insurance policy for the purposes of utilizing many potential tax-saving strategies that can only be achieved through a whole life insurance policy (think Infinite Banking Concept).

In cases like these it may make sense to own two different life insurance policies on oneself since each will be used to achieve a different objective other than just protecting the finical future of your family.

  1. Can’t qualify for a traditional life insurance policy.

Lastly, sometimes folks won’t be able to qualify for a traditional term or whole life insurance policy. Now, this may be because of a pre-existing medical condition, trouble with the law (previous felonies) or because they are currently receiving some type of disability benefit. As a result, some clients may choose to apply for a guaranteed issue life insurance policy that won’t require one to “medically” qualify or ask any questions regarding their past.

“Which is great!”

However…

These “types” of life insurance policies will only offer coverage up to about $25,000 in coverage, which means that if someone wishes to purchase more coverage than this, they will need to purchase multiple policies from different insurance companies.

And there you have it the top 7 reasons why some people will choose to purchase multiple life insurance policies on themselves.

Now, are these the only seven reasons why someone might choose to purchase multiple insurance policies on themselves?   

No, of course not, but these seven will give you a general idea about “why” someone might choose to purchase multiple life insurance policies on themselves and how different “types” of life insurance policies can come into play when trying to help someone achieve their desired goals.

Which is why…

We here at IBUSA would encourage anyone who is considering buying a second life insurance policy on themselves or is considering purchasing two different life insurance policies simultaneously to give us a call first. The reason for this is because not only are we experts at helping folks qualify for excellent coverage. We also have access to dozens of different life insurance companies so that when it comes time to help you decide which company is going to be “right” for you, we won’t have to rely on a…

“One size fits all approach!”

So, give us a call and let us show you want we can do for you!

 

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