It’s possible and legal to have multiple life insurance policies depending on the options available to you and your specific coverage needs. It’s common for people to shop for an additional policy after experiencing a major life event that impacts their finances, like buying a house or having a child.
Your policies can be a combination of term or permanent depending on your situation. The only time you can’t buy an additional life insurance policy is when you’re trying to get more coverage than you qualify for — most people can only qualify for between 10 and 30 times their annual income, depending on their age.
Here are some scenarios where having more than one life insurance policy may make sense for you.
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What are the reasons to get more than one life insurance policy?
It’s common for people to shop around for an additional life insurance policy, even if they currently have life insurance or have had it in the past.
Some common reasons include wanting to increase your coverage after experiencing a major life event like marriage or the addition of a child to your family, wanting to supplement a policy offered through an employer, or wanting to have a separate policy to cover final expenses:
You need unexpected additional protection to cover 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 life insurance policy
One of the most common reasons you may be considering an additional life insurance policy is to supplement your coverage from the group policy provided by your employer.
While group policies are a benefit offered by many companies to their employees, the coverage amounts are usually pretty low compared to a traditional term life 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.
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. Term life insurance is the most popular coverage option because it's affordable, straightforward, and only lasts as long as you need it.
For example, you could buy three separate term life insurance policies with decreasing coverage amounts but shorter term lengths: a 10-year policy of $500,000, a 20-year policy of $300,000, and a 30-year policy of $200,000.
If the three policies become effective around the same time, you will have the highest combined amount of coverage for the first 10 years ($1 million total life insurance coverage) 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).
→ Learn more about the life insurance ladder strategy
You want to supplement a permanent policy
Permanent life insurance coverage lasts your entire life — this is one of the reasons it’s five to 15 times more expensive than a term policy. Some people choose to supplement their permanent policy with a term 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 ten 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, a person with a whole life policy worth $250,000 may decide to take out an additional 20-year term life policy worth $750,000 while their children are growing up. After 20 years, their children will be financially independent, and the term life policy will expire. The insurance holder will just have just their original whole life policy.
You want to provide an inheritance
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.
You want to help finance your final expenses
In 2021, 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 go toward end-of-life expenses. However, keep in mind that final expense policies don’t require the beneficiary to use the death benefit for final expenses, so make sure your beneficiary is aware of your intentions.
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 help them to stay afloat 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.
Can you apply to multiple life insurance companies at once?
You can apply for life insurance with several insurers at the same time, but it rarely makes sense to do so.
Life insurance companies use financial underwriting guidelines 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 delay because it looks like you’re trying to apply for two times more coverage than you actually need.
You might also have to take two medical exams, which can be inconvenient.
Someone might want to apply with two insurance companies at the same time to make sure they’re getting the cheapest final rate — you’ll know for certain what rate you’ll pay once you go through underwriting. However, working with an independent broker can help you compare insurance companies before applying.
At Policygenius, we can help you shop around even after you’ve gotten your final offer to make sure you’re getting the lowest price for you.
Are multiple 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 policy through your employer, you may want an additional personal policy.
If you already have a personal life insurance 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.
While there are no financial risks associated with having multiple policies, there are some administrative risks: you need to make sure you pay all the premiums on time and for the whole duration of each of those policies, otherwise they will lapse and you’ll lose coverage.
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.
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.
Frequently asked questions
Can you have two life insurance policies from the same company?
Yes, you can have multiple life insurance policies from the same life insurance company.
Is it illegal to have multiple life insurance policies?
It's not illegal to have multiple life insurance policies. The only limit is on how much total coverage you have, which must be proportionate to your financial obligations.
How many life insurance policies can a person have?
There's no limit on the number of life insurance policies you can have, but insurance companies will look at your total coverage amount. As a rule of thumb, your coverage typically can’t exceed 15 to 30 times your annual income, depending on your age.
Should married couples carry multiple life insurance policies?
Married couples will likely want to have individual life insurance policies, especially if one spouse relies on the income of the other. Speaking with a licensed agent or financial advisor can help you determine if you need additional coverage or multiple policies when you get married — it depends on your personal financial situation.
Is it legal to apply for life insurance through several insurers?
Yes, you can apply for multiple life insurance policies with different insurers, although doing so at the same time may slow down or complicate the application process. Life insurance companies tend to look at your total coverage amount rather than the number of policies you have before approving you for another policy.
