Life insurance is an excellent way of providing financial assurance to your loved ones in the event of your unexpected death.

Can you have more than one life insurance policy?

Yes, you can hold more than one life insurance policy. No law forbids you from having various life insurance policies. However, in most cases, one life insurance policy is enough.

Why is it beneficial to have more than one life insurance policy?

Multiple life insurance policies may be beneficial to you if:

  • You want to maximize your coverage due to your financial responsibilities, such as supporting the well-being of your children, covering mortgage payments, college tuition, and more.
  • Your health has improved (i.e., you’ve stopped smoking, lost weight, etc.), and as a result, you want to shop around for better premiums while keeping your old policy active
  • You want to have two single life insurance policies instead of a joint policy with your partner.

Do you need more than one life insurance policy?

Although it is possible to have more than one life insurance policy, that doesn’t mean it is necessary. Your life insurance premiums result from the information you disclosed in your life insurance application when you took out your policy. It is important to remember that there is no guarantee that you will pay the same premium for your new policy as you did for your old one.

Many policyholders adapt their existing policy to their needs at the time.

Is it possible to have multiple life insurance policies as a couple?

Yes, it is possible.

Some couples prefer it this way. Joint life insurance covers two policyholders but typically pays out upon the death of the first insured person during the policy term. At this time, the policy will be terminated, meaning that a policy will not cover the amount more than once. However, when you take out two single life insurance policies, the widow(er) will still have coverage in place in the event of a death.

This may be important to consider when you have children or relatives whose well-being is dependent on you. For example, if a husband and wife with three children get into a car accident and die, the amount will only be paid out for one of the deceased parents. Whereas, if you have two single life insurance policies, it would be paid out twice, which could be significant when considering the cost of raising multiple children.

How many life insurance policies can you have?

Legally, there is no limit. However, it is essential to remember that if you find your situation changes in the future, sometimes you can adapt your existing policy, which in some cases may be better.

Can you have life insurance with more than one life insurance provider?

Yes, you can take out several life insurance policies with more than one insurance provider. No law prevents you from having multiple policies.

Mistakes To Avoid When Purchasing Life Insurance

Waiting Too Long

When you purchase life insurance, it is essential to evaluate how much you need to insure and the cost. Premiums are based on several factors that include your age, weight, income, gender, and sometimes even credit history.

Purchasing a life insurance policy early on in your life comes with significant advantages if you’re looking to find a policy at a low premium. Policy premiums tend to cost more as people get older and their health begins to dwindle. Sometimes, illnesses and other health issues can make insurers deny you a policy. The more you wait to purchase a life insurance policy, the higher it will cost.

Purchasing the Most Affordable Policy Available

Although it is good to save money, it’s essential to evaluate the coverage you are really getting out of it. Life insurance policies can be incredibly confusing, so it’s necessary to educate yourself to the best of your ability on the features and benefits of different approaches.

Letting Premiums Lapse

When you purchase a policy, you expect to pay a monthly premium for coverage. Some policies can be very unforgiving in the event of a missed payment. For example, if you miss a monthly payment, your policy may no longer be effective, despite all the on-time payments you’ve made before that.

Good to know: Notify your life insurance company as soon as possible in the event that you may not be able to make the payment. It is not uncommon for insurers to give you a 1-2 month grace period without affecting your policy’s guarantee if you let them know in advance.

Not Knowing How Variable Life Insurance Works

Variable life insurance policies are a type of life insurance policy that has a cash value associated with your protection. A portion of the premium goes to your life insurance, and the other to a cash-value account invested in mutual funds of your choosing. Like any other mutual fund, your portfolio value may vary from time to time.

It is not uncommon for policyholders to look at these policy values as a way of supplementing their income during retirement. It is critical to funding a variable life policy with regularity to maximize portfolio growth. Hence, keeping up with premium payments even during poor investment performance. Paying less in the short term can significantly impact the cash value that is available for withdrawal later on. Therefore, it is critical to monitor the performance of your policy and manage your accounts from time to time to your desired allocation, like any other investment account. Doing so will ensure you aren’t taking on unnecessary risk.

Making Withdrawals From Your Policy

Permanent life insurance can be an excellent source of funds when you need to liquidate assets quickly. Luckily, The portfolio value can be used for any reason you deem appropriate, and if done correctly, can include withdrawals that are free of tax.

Despite this being an excellent perk, you must do so wisely. If you withdraw a substantial amount of cash and your policy lapses, all the profits you’ve made become taxable. You may also reduce the death benefits available to your loved ones when you’re gone.

If you find yourself in a situation when you have withdrawn too much cash out of your account and you are close to lapsing, you might be able to maintain your current policy by making additional deposits.

Good to know: When you are assessing the cash value of your life insurance policy, remember to closely monitor it and seek out assistance from a tax accountant to avoid any issues.

Purchasing a life insurance policy is an important decision that shouldn’t be taken lightly. Before committing to an insurer or signing off on a policy, be sure to do as much research as you can to make an informed decision. Passing on life insurance may not directly affect your life; it will most definitely hurt the people that could benefit from your protection.

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