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All your questions about multiple policies, multiple applications, and multiple carriers.
It’s totally possible — and legal — to have multiple life insurance policies. In fact, many people do: they have life insurance coverage through their employer, plus their own term life policy or permanent life insurance policy that isn’t tied to their employment and may offer additional coverage (a higher death benefit).
But it’s also possible to have life insurance policies beyond just those two, and there many reasons you may choose to spread your coverage out like that. There are reasons may you choose not to, as well.
Read on to find out:
Technically, you can apply for a life insurance policy with several life insurance companies at once. But it rarely makes sense to do so, and there are some big reasons not to. The main one: multiple life insurance applications can slow down the application process.
Here’s why: Life insurance companies share information about applications and policies through the Medical Information Bureau (MIB). All of your life insurance applications are logged there, to ensure that multiple companies aren’t insuring you beyond your coverage limits. If you’re applying to two carriers at the same time to see which comes up with the better offer, you could get denied for both because it looks like you’re trying to apply for double the coverage that your income and assets allot for. At the very least, your applications could be delayed while the insurance companies sort out the information on your MIB report. And you may have to undergo multiple medical exams.
Working with a certified life insurance broker like Policygenius to get life insurance quotes can help you find the best life insurance company for your particular situation — and help shepherd your application through the process. And the best part? If your first application doesn’t work out — for example, your medical tests come back and your premiums are higher than your initial quote — we’ll work with you and the insurers in our network to find the right life insurance company for you and get your policy in force. And, if you already went through a medical exam the first time you applied, you won’t have have to through a second medical exam.
While applying to multiple insurance companies at once isn’t recommended, it is possible to purchase multiple policies, either from the same company or from multiple companies, if you like.
There are a few reasons that it might make sense for you to have multiple life insurance policies. Some of the most common ones include:
You need additional coverage. If your financial or family situation changes, for example, when you get a new mortgage or have another kid, it makes more sense to buy another life insurance policy rather than increase the coverage limit on your current policy.
You are undertaking an advanced financial strategy. For example, some financial planners suggest something called the ladder strategy, which involves stacking multiple term life insurance policies that expire as you pay down your debts. (For example, a 30-year term policy, a 20-year term policy, and a 10-year term policy.) Stacking policies can mean you pay lower premiums over the lifetime of the policies than if you just had one level premium.
You want to mitigate risk. Some people don’t like the idea of relying on one company to guarantee their beneficiary’s (or beneficiaries’) future, even though it is very rare that a life insurance company goes out of business. (You can pick a good carrier by comparing life insurance companies based on their ratings with different bureaus.) For some people, it’s important to have that added level of protection, but it’s almost never necessary.
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It’s important to note that spreading your coverage across carriers does not increase your insurability, or the amount of life insurance coverage you can buy. Whether you go with one policy or multiple policies, and whether you buy from one carrier or multiple carriers, the total amount of life insurance you can buy — that is, the total death benefit — has to be an amount that makes sense for your income and assets. The death benefit is meant to help your beneficiaries in case you and your income are gone.
As mentioned above, life insurance companies share information about applications and policies through the Medical Information Bureau (MIB). All of your life insurance applications are logged there, and in addition to combating fraud, this ensures that multiple companies aren’t insuring you beyond your coverage limits.
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Yes, we have to include some legalese down here. Read it larger on our legal page. Policygenius Inc. (“Policygenius”) is a licensed independent insurance broker. Policygenius does not underwrite any insurance policy described on this website. The information provided on this site has been developed by Policygenius for general informational and educational purposes. We do our best efforts to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Savings are estimated by comparing the highest and lowest price for a shopper in a given health class. For example: for a 30-year old non-smoker male in South Carolina with excellent health and a preferred plus health class, comparing quotes for a $500,000, 20-year term life policy, the price difference between the lowest and highest quotes is 60%. For that same shopper in New York, the price difference is 40%. Rates are subject to change and are valid as of 2/17/17.
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