You can have more than one life insurance policy at a time. The type, number, and payout amount of different policies you can have will depend on your personal situation and the options available to you — but having multiple policies may allow you to meet different coverage and financial needs at the same time.
However, there’s a limit to the total coverage amount you can have. Most people can qualify for a maximum between 10 and 30 times their annual income, depending on their age.
If you want to buy additional life insurance, start by determining how much life insurance you need and considering your options. Here’s when having more than one life insurance policy makes financial sense and what you need to know about purchasing multiple life policies.
Reasons to get more than one life insurance policy
The main reason to buy life insurance in the first place is to provide a financial safety net for your loved ones in the event of your death. But as your family grows and your financial obligations evolve, you may need more than one policy to meet that goal.
Here are some scenarios where shopping for additional coverage may make sense.
You need to cover a new major life event, like getting married or buying a house.
You want to supplement group life insurance provided by your employer.
You want to ladder multiple term life policies to address different financial needs.
You want to complement a whole life insurance with an affordable term life policy.
You want to help pay for your final expenses, like your funeral.
You want to leave an inheritance to your loved ones.
You have a small business you need to protect, in addition to protecting your family.
You need to cover new major life events
If you experience a major life change that impacts your finances, it makes sense to get more life insurance coverage to protect your beneficiaries after your death.
We recommend re-evaluating your financial needs when you are:
If you need more coverage, you can either buy an additional life insurance policy or replace your current policy with another one with higher coverage.
Depending on how much more coverage you need, buying a supplemental policy may be the cheapest option. 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.
The best way to know which option is going to be most cost-effective for you is to work with an independent broker. At Policygenius, we can walk you through your choices for increasing your life insurance coverage, whether that’s replacing your old coverage or buying an additional life insurance policy.
You want to supplement your employer’s group life insurance policy
One of the most common reasons to consider buying an additional life policy is to supplement your coverage from the group policy provided by your employer.
While group life insurance policies are a benefit offered by many companies to their employees at no cost or a subsidized rate, the coverage amounts are usually pretty low compared to a traditional term life insurance policy — your employer might offer you one or two times your annual salary, when most people need life insurance that is 10 to 15 times their income.
Another reason to supplement your group coverage is that your group coverage will typically expire if you leave your job. The good news is you can easily supplement your coverage with a personal policy that fits your needs — and term life insurance is the cheapest option to do so.
For example, a 30-year-old who doesn’t smoke and is generally in good health can expect to pay $26 per month ($312 per year) for a 20-year term life insurance policy with a $500,000 death benefit payout.
You want to ladder multiple term life insurance policies
The life insurance ladder strategy allows you to stack multiple term life policies with different term lengths and coverage amounts that expire as you pay down your debts. When you ladder policies, you can cover different life events and pay only for the coverage you need at every stage of life.
For example, you could buy three separate term life policies with decreasing coverage amounts but shorter term lengths: a 10-year policy with a $500,000 payout, a 20-year policy with a $300,000 payout, and a 30-year policy with a $200,000 payout.
If the three policies become effective around the same time, you’ll have the highest combined amount of coverage for the first 10 years ($1 million total life insurance coverage), during the period of your life when you have the highest combined expenses — such as student loans, childcare, or 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, or paying off your mortgage.
You’ll only keep the policy with the longest term from then on, and only with the coverage amount you’d need at that particular stage in your life ($200,000 for 30 years).
You want to supplement a whole life insurance policy
Whole life insurance is a type of permanent life insurance that doesn’t expire and comes with a separate cash value account that grows tax-free over time — which is why whole life is significantly more expensive than term life. Whole life is usually a good fit for high-net-worth individuals who are looking to diversify their investment portfolio, or for people who have dependents who require lifelong care.
You may want to supplement your whole life policy with a term life policy because it can be expensive to have a permanent policy with the total coverage amount you need.
As we mentioned above, coverage needs can change over time, too. “A client might need a larger amount of coverage for the next 10 years until children are out of college. Needs for a lesser amount might persist after that,” says Allan Phillips, a certified financial planner, life insurance expert, and founder of Tree Street Advisory.
In a case like this, if you already have a whole life policy worth $250,000, you may decide to take out an additional 20-year term life policy worth $750,000 while your children are growing up. After 20 years, your children will be financially independent, and the term life policy will expire. At that point, you’ll just need to keep your original whole life policy.
You want to help finance your final expenses
In 2022, the average cost of a funeral ranged from $7,000 to $10,000. If you’re worried about this financial burden falling on your loved ones, final expense insurance may be a good policy to consider adding on top of your normal group or term life policy.
Final expense insurance is a type of permanent insurance in which the death benefit is meant to cover end-of-life expenses, like a funeral or medical bills — coverage amounts are usually low, up to $50,000. However, final expense policies don’t require the beneficiary to use the death benefit for final expenses, so make sure your beneficiary is aware of how you want the policy payout to be used.
You want to provide an inheritance to your loved ones
Wanting to take care of your spouse, children, or family after your death is often the primary reason people choose to get one (or more) life insurance policies.
If your primary policy doesn’t offer enough coverage to protect your family or loved ones in the event something happens to you, it may be a good idea to get a policy that will.
If you’ve already saved up or have coverage for end-of-life expenses, the death benefit from a supplemental policy can become a nest egg for your loved ones.
If you have a large estate, an additional life policy can help your beneficiaries offset inheritance taxes.
You have a small business
If you’re a small business owner, a personal life insurance policy is especially important because you may not have employee benefits like a retirement account, group life insurance, or disability insurance.
If your family relies on the income that comes from your small business, a death benefit may provide financial support after your death.
To protect your business as well, you may want to consider a supplementary key person insurance policy. This is a specific type of company-owned life insurance designed to help keep a business afloat even if the owner or another important employee dies.
Limits on the amount of life insurance you can have
Your age and annual income play a key role in determining how much coverage life insurance companies can offer you regardless of how many policies you have.
For people age 18 to 40, coverage is usually limited to 25 to 35 times your annual income.
For people age 41 to 60, coverage is limited to 15 to 25 times your annual income
For people age 61 to 80, coverage is limited to five to 10 times your annual income.
In general, the younger you are the higher the amount of coverage you can have — that’s because when you’re older and closer to retirement, you wouldn’t need to replace your income for as many years.
Age 18 to 40
Up to 35x annual income
Age 41 to 50
Up to 25x annual income
Age 51 to 60
Up to 20x annual income
Age 61 to 70
Up to 10x annual income
Age 71 to 80
Up to 5x annual income
Things to consider when buying additional life insurance
Depending on your personal situation and coverage needs, you may have to go through the life insurance application process from scratch or provide additional information to your insurer in order to buy additional policies. Here are some things to keep in mind.
You might have to go through underwriting. This is the process during which the life insurance company assesses your insurance risk and determines how much coverage it can offer you and how much you’ll pay for it. During underwriting, you’ll have to provide information about your health, household, and finances.
You might have to take a medical exam and meet additional underwriting requirements. Depending on your age, health, and the type of policy you’re applying for, insurers might ask you to a medical exam. And if you’re applying for a large coverage amount — for example, $5 million or $10 million — some insurance companies might request an EKG (also abbreviated ECG, standing for electrocardiogram) if you’re over the age of 50.
You might have to provide additional information about your financial situation, like your income and assets, in order to justify the need for additional coverage.
You’ll have to disclose your existing policies, so the insurance company you’re applying with knows how much coverage you already have.
You’ll have to make sure to pay all premiums on time and for the entire duration of each of policy, otherwise they will lapse and you’ll lose coverage.
Be honest and straightforward during the application process. Insurers can verify your information through the Medical Information Bureau (MIB), where insurance companies have access to complied information from previous life, health, disability, and long-term care insurance applications.
If the insurer finds out you lied or misrepresented yourself during the application process, it might decline you coverage or refuse to pay the death benefit to your beneficiaries if it determines you committed life insurance fraud.
Are multiple life policies right for you?
As with most things in the life insurance industry, whether or not a policy (or multiple policies) is right for you depends on your personal financial needs.
If you currently have a group life policy through your employer, you may want an additional personal policy.
If you already have a personal life policy, but your circumstances have changed, you may want more coverage.
Factors such as income, health, dependents, and your occupation will also determine if you need more coverage from multiple policies.
Buying multiple 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.
If you’re not sure if having multiple life insurance policies is right for you, we can help. At Policygenius, our agents are licensed in 50 states and can help you find the right coverage for your needs at your lowest price.