It’s possible — and legal — to have multiple life insurance policies. The most common example: Many people have life insurance coverage through their employer in addition to a personal term life insurance or permanent life insurance policy. The only time you cannot buy more than one life insurance policy is when you’re trying to get more coverage than you actually need (most people can only qualify for up to 15 times their annual income in total life insurance coverage).
You can buy additional life insurance for new financial obligations, such as a large loan or a new baby. Some people buy multiple policies that expire as they age (known as "laddering") to save money on premiums over time. Learn when buying more than one life insurance policy makes sense and when it doesn't so you can shop with confidence.
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Who needs multiple life insurance policies?
Many people opt into the group life insurance offered by their employer, but those policies don’t offer as much coverage as you actually need. Most people with group life insurance can qualify for additional coverage, but you'll need a good financial reason to increase your total death benefitbeyond a certain amount. Below are some situations when increasing your total life insurance amount makes sense:
You need additional coverage
If you experience a major life change that impacts your finances, it makes sense to get more life insurance coverage. That could mean buying another life insurance policy rather than increasing the death benefit on your current policy.
We recommend reevaluating your financial needs when:
Depending on how much more coverage you need, buying a new policy may cost less than increasing the coverage on your existing policy. You can also buy a new policy with a term length tailored to your life event, like a policy that lasts as long as your mortgage.
You want to mitigate risk
It’s rare for a life insurance company to go out of business, and rarer still for you to be without coverage if your insurer does face that worst-case scenario. But, having policies with multiple life insurance companies can offer some peace of mind if you want to be extra careful with your beneficiaries’ future financial support.
If one provider does go out of business, your beneficiaries won’t be left without any financial protection.
You’re laddering your life insurance policies
The ladder strategy is when you have multiple term life insurance policies with different term lengths that expire as you pay down your debts.
For example, you could buy three separate term life insurance policies in increasing coverage amounts: 10-, 20-, and 30-years. If the three policies go in force around the same time, you will have the highest combined amount of coverage for the first 10 years when you have the highest combined expenses (such as student loans, childcare, and a mortgage). Your coverage in this scenario will gradually decrease as your policies expire to coincide with your shrinking debt and fewer dependents (paying off student loans, children growing up, and paying off your mortgage).
Can you apply to multiple life insurance providers at once?
You can apply for life insurance with several life insurance companies at the same time, but it rarely makes sense to do so.
Life insurance companies use evidence of insurability to determine the amount of life insurance you can reasonably purchase based on your financial situation. If you apply to two insurers at the same time, it could cause confusion and delays because it looks like you’re trying to apply for two times more coverage than you actually need.
If you want to buy more than one policy at the same time, an insurance agent or broker can help you get the details right.
Alternatives to buying multiple life insurance policies
If you want additional coverage but don’t want to apply for an entirely new policy, you can alter or increase your coverage directly with your current life insurance provider or through a Policygenius agent in either of the following ways:
Increase your death benefit: Many insurance companies offer a guaranteed insurability rider that lets you to raise your coverage amount after major life events. You won't have to go through underwriting again and the rider comes at a low cost.
Life insurance riders: Riders are an easy way to customize or add small amounts of coverage to an existing policy. A child rider, for example, is an affordable way to add a small amount of coverage for your children.
Buying multiple life insurance policies can be a smart way to get additional coverage to insure against a specific debt, like a mortgage, or if you want to implement a more complicated financial strategy, like the ladder strategy. Make sure to consult a financial professional or reach out to a Policygenius agent for free to find the best option for your circumstances.
Frequently asked questions
Is it illegal to have multiple life insurance policies?
You can have multiple life insurance policies. The only limit is on how much total coverage you have, which should be proportionate to your financial obligations.
When does it make sense to have multiple life insurance policies?
Many people have multiple policies because employer-sponsored life insurance doesn't offer enough coverage. You may also want a policy tailored to a debt or want to ladder policies to save money.
Can I apply for life insurance with multiple insurance companies?
Although you can apply for as many policies as you’d like simultaneously, it's best to avoid doing so. Providers might think you're trying to buy too much coverage, which will delay your applications.