Can You Have More Than one Life Insurance Policy?

Yes! Because sometimes one isn’t enough.

Written by Medora Lee / June 15, 2022

Quick Bites

  • Life insurance allows you to protect your loved ones and your assets when you die.
  • Whole life insurance, also known as permanent, and term life insurance are the two most common types.
  • But sometimes one policy isn't enough to cover your needs.

Yes! You can have more than one life insurance policy and even through different companies.

However, the total amount you can have usually depends on what you own, what you owe, how much you make and how much you’re estimated to earn because that’s what the insurance is meant to replace if you die. Let’s dig in.

Inside this article

  1. What is life insurance?
  2. How does life insurance work?
  3. Can you have more than one kind?
  4. Examples
  5. FAQ

What is life insurance?

Life insurance is a policy you pay for to ensure your loved ones or favorite charities are taken care of financially when you die. You pay a regular amount while you are living, called a premium, for this policy and you designate who the beneficiaries are and how much they receive. And that money they receive is tax-free.[1]

5 Benefits of Life Insurance

5 Benefits of Life Insurance

Life insurance can help protect your family when you pass away and even earn you money while you are alive.

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How does life insurance work?

An insurance company will evaluate your assets, liabilities, earnings and earnings potential to determine how much life insurance you can get. Once you agree on the details and sign the contract, you’ll start to pay regular recurring amounts to ensure loved ones or charities you choose will receive money to cover some of their expenses after you die.

Is Life Insurance Worth It?

Is Life Insurance Worth It?

Learn how life insurance works, how much it costs and whether you should get it.

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Can you have more than one kind of life insurance?

Yes, because sometimes one kind isn’t enough to cover all your needs.[2]

There are two main types of life insurance: whole and term. [3]

Whole life insurance covers your entire life. It never has to be renewed and has a steady premium rate so you always know what it costs. That’s great for budgeting.

Another benefit is that it can help you accumulate cash value (part of your premium that gets set aside as a kind of savings account) to borrow against in the form of a cash loan for any expenses during the end of your life. It’s great to have in case you have any unexpected expenses, including medical issues.

These benefits come at a price. Premiums are typically very high so consider whether you really need the ability to borrow against the plan. If not, some less expensive options may work just fine for you.

Term life insurance covers you for a specific period of time, say one, five,10 or sometimes as many as 30 years. There’s only a payout if the insured person dies within the term of the policy. If not, the policy may be renewed but the premium may rise, especially if your health has deteriorated.

There’s no cash value benefit from the policy. Your premiums only go towards a payout. That’s one reason it’s often less expensive than whole life insurance.

Examples

Your needs can change as you age, and your life insurance coverage should change with them. Maybe you now have a family and a home or a business, and you need more coverage. You can consider buying another policy to supplement what you have to ensure if something happens to you, your loved ones and your assets are fully protected.[4]

For example, let’s say you’re married and have a whole life insurance policy that’s enough to cover your spouse’s needs in case you die, but you two have kids. While the kids are young and in your care, say for the next 10 to 20 years, you might want some additional coverage so they’re protected, too. This is when you might consider an additional term life policy for 20 to 25 years, until they are on their own and can start purchasing their own life insurance.

Does Supplemental Life Insurance Make Sense for you?

Does Supplemental Life Insurance Make Sense for you?

Supplemental life insurance, also known as voluntary life insurance, adds extra coverage and financial protection at an affordable price.

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Some parents also consider buying whole life policies for their young children when premiums are still relatively low so the kids can start to build wealth through the cash value building component of the policy.

Another time to consider an additional policy is as a supplement to a work policy. Companies often offer term life insurance as part of an employee benefits package. They are usually fairly inexpensive, but coverage amounts are typically low and often inadequate for your family. Additionally, if you leave the company, you usually can’t take it with you and you lose coverage.

If you’re unsure about the amount of coverage you need, there are online calculators like Fidelity Life’s and Life Happens' you can use as a guideline or you can consult with an advisor.

FAQ

  • What are the two types of life insurance?

The two most common types of life insurance are whole life and term. Whole life spans your entire life. Term lasts a set timeframe (generally anywhere between 1 and 30 years), making it a more affordable option.

  • Can you own more than one life insurance policy?

Yes. There is no limit on how many life insurance policies you can own, but some insurers may limit the amount of coverage you may buy based on your assets, income and liabilities.[5]

Article Sources
  1. “Life Insurance.” Liberty Mutual. https://www.libertymutual.com/life-insurance
  2. “Exploring multiple life insurance policies?” Protective. https://www.protective.com/learn/can-i-own-more-than-one-life-insurance-policy
  3. “What are the principal types of life insurance?” III. https://www.iii.org/article/what-are-principal-types-life-insurance
  4. “Can you have multiple life insurance policies?” Guardian. https://www.guardianlife.com/life-insurance/multiple-policies
  5. “How much life insurance do I need?” Life Happens. https://lifehappens.org/life-insurance-101/how-much-life-insurance-do-i-need/

About the Author

Medora Lee

Medora Lee

Medora has more than 25 years of experience reporting, writing and editing mostly as a finance and economics journalist around the globe. She has covered every aspect of finance and economics, including the fall of Barings Bank in 1995 and Europe's transition to Economic and Monetary Union and the birth of the euro. She has worked at such international stalwarts as Reuters and Forbes.com as well as startups that grew up like theStreet.com.

Full bio

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