Affordable Life Insurance Protection for Your Family

Can You Buy More Than One Term Life Insurance Policy?

If you're shopping for term life insurance you may be wondering, "Can I Buy More Than One Term Life Insurance Policy?"

The answer may surprise you. 

Actually, there is no limit to the number of term insurance policies you can own.

That’s right, you can have more than one term policy, or even 5 if you need them.

How can this be? Well, your life insurance needs may change over time as your financial responsibilities increase. So, you may want to buy another term policy to provide added protection for your growing family.

Or, you may already own a term life policy, but maybe you need a lot more protection at a lower price, so you might want to purchase an additional term insurance plan to meet your growing needs.

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Can You Have Multiple Term Life Policies?

Yes, you can have multiple term policies from the same, or different life insurance carriers.

Example: For example, you could have a permanent life insurance policy for long-term needs, and a term life policy for your short-term needs.

Or, you could have two separate term life policies for different durations to meet your specific short-term needs.

You can have as many term life insurance policies as you wish, as long as you qualify financially for the total amount of insurance coverage you own.

Sometimes, it can be more cost effective to take out several term insurance policies, especially if you only need a small portion of the coverage for a very long period of time.


However, sometimes it’s better to combine term policies, such as:

  • If the industry premiums are lower now than they were when you purchased your policy
  • If you used to smoke and no longer would be charged smoker rates
  • If you had a health condition in the past that has since been resolved
  • If you are paying policy fees on several term policies and can save money by combining all your coverage into one life insurance policy.

 

Example of Multiple Term Policies

Let's say you purchased a 20-year Term Policy of $200,000 coverage when you were in your early 20's. 

Now you're in your 30's, you’re married with children, and you need more coverage to protect your growing family.

You don’t have to give up the excellent rate you have locked in on your current $250,000 policy. 

You can simply add a new term policy to your financial plan. 

So, you may want to purchase a new 20-year term life insurance policy to cover your growing family until the kids are all grown-up and independent.

 

Example: You own a home and you are married with young children.

Buy a 30 year $500,000 term life policy to protect your mortgage and replace your income.

Buy a 20 year $200,000 term life policy to provide for your kid’s college education.

In addition, you may want to purchase a term life policy on your spouse to replace his/her income, or to pay someone to perform all of the work he/she does for the family as a stay-at-home parent and homemaker.

 

Term Life Insurance Policies and Amount of Coverage

A life insurance company might question your motivesfor taking out too many policies, especially if your current financial situation does not support the overall cost of your life insurance.

Basically, the issue for insurance companies isn’t how many policies you own, but rather the total amountof life insurance coverage you have, compared to your income, assets and total financial responsibilities.

As long as you can pay the premium, there is no limit to how many life insurance policies you may own.

When purchasing more than one policy, remember to keep a master copy of all the information in a safe place (safety deposit box or fireproof safe) so when you pass away your family will know exactly where to find the insurance policies.

Simply put, there is no legal limit to how many life insurance policies a person can own, nor how many of each type. 

It appears current Legislation does not exist that restricts the number of life insurance products any one person may purchase.

 

Owning More Than One Life Insurance Policy

The ability for a person to own more than one life insurance policy allows people with limited funds to slowly buy additional life insurance policies as their available income increases over time.

At first, when you are young with a limited income, you may not have the money to buy the amount of life insurance you really need. 

So, over time, you can increase your coverage amount as your income increases, to meet your actual need for financial protection.

 

Buying More Than One Term Policy at a Time

Currently there appear to be no laws prohibiting a person from buying multiple life insurance policies at the same time.

However, life insurance applicant information is submitted to the Medical Information Bureau (MIB), and all insurance companies research a new customer's files prior to issuing a new policy for life insurance.

Someone trying to buy more than one life insurance policy at the same time, or multiple life insurance policies within a short time span, may raise concerns within the insurer’s underwriting department which may lead to delays or even rejection of your application for coverage.

 

Amount of Life Insurance You Can Buy 

In addition, there currently appears to be no laws restricting how high of a death benefit an applicant for life insurance can buy.

Placing a value on a person's life is a matter of opinion, and there are several accepted methods used within the life insurance industry to determine what is considered an appropriate level of coverage.

Most life insurance companies have their own policies regarding limits on death benefits for life insurance.

A person who applies for a life insurance policy with a death benefit higher than what the insurance company deems normal and ordinarymay have to provide further documentation or explanation for the request. 

The idea is that the insurer does not want you to be over-insured. 

Life Insurers consider your annual income and life insurance needs when approving the amount of life insurance they offer you.

 

Why Buy More Than One Term Life Policy?

There are many reasons that may arise for adding an additional life insurance policy based on increased needs.

For example, the birth of a new child creates a significant financial liability for parents. 

Or, you may buy a new home with a larger mortgage you want protected by your life insurance policy.

 

Laddered Life Insurance Protection

One way of using multiple term life policies to protect your varying insurance needs is through the use of laddering.

Laddering means you buy several policies with different durations of coverage to meet your specific life insurance needs which vary by length of protection needed.


Example of Laddered Term Life Insurance Policies

Policy #1– $275,000 30-year term life policy to protect your thirty-year home mortgage loan.

Policy #2– $200,000 20-year term insurance policy to provide funds to pay for your children’s (ages 2 and 3) college education. 

Policy #3– $500,000 15-year term policy to replace your income and help pay the living expenses for your family.

 

Benefits of Laddering Coverage with Multiple Term Policies

  • Lower Cost of Life Insurance
  • More Accurate Amount of Protection


Basically, with laddered coverage you pay less for the protection you need, while you need it.

Instead of buying one 30-year term life policy at $975,000 of coverage using the example from above, you have 3 separate policies at the amount of life insurance you need, to meet your specific protection needs for that specific timeframe.

 

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