Yes, you can have multiple life insurance policies, and they can be purchased from different companies. Having an additional policy ensures your loved ones are taken care of for as long as they need protection.
There are two forms of life insurance, each having pros and cons. One form is permanent life and the other is term life, which is the most popular, mainly because it’s more cost-effective. Term policies cover you for a fixed amount of time, typically for 5 to 30 years, but there is no more protection when your policy ends. Purchasing both a term and permanent life insurance policy can be useful 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. Then you can use your permanent life policy to leave your family with some money after they no longer depend on you financially. However, there is a limit to how much total coverage you can apply for at once, which is typically 15 times your income. The only reason you wouldn’t be able to buy more than one life insurance policy is when you’re trying to get more coverage than you actually need.
In what cases should you have multiple life insurance policies in place?
Sometimes your insurance coverage needs change over time. If you were to experience a major life event that impacts your finances, it may make sense to add more life insurance coverage. You might buy a house or even start a new business, all of which bring new financial obligations that your current policy may not completely cover.
Another common reason is if you were to have children, which usually means adding a considerable amount more coverage. However, when your children are grown and on their own, you may want to maintain a lower amount of life insurance coverage. Different policies offer different features, and one might provide financial benefits that are useful while you’re still alive. Depending on how much more coverage you need, buying a new policy may cost less than increasing the coverage on your existing policy.
If you decide to renew your term life coverage, your insurance rates will usually be more expensive because you’ve gotten older. Plus, if you’ve encountered health issues over the years, your premium will most likely increase.
On the other hand, permanent life insurance covers you for your entire life and builds cash, which has tax advantages. You would be able to borrow against your cash value or even cash out the policy to add to your income or savings. Permanent life insurance is different from term life insurance because your rates are not affected by any health issues as you age.
How you choose to get your coverage is also important. You may decide to buy life insurance as an individual or as a group, which is normally through your employer. Group insurance usually comes at a lower cost, but the amount can be limited. That’s why getting additional life insurance matters because it will provide more protection for your family.