Can You Have Multiple Life Insurance Policies?
Yes, to put it bluntly. You are allowed to have many life insurance policies, and they do not have to be purchased from the same firm. But the more pressing question is why anyone would desire to do so. Because purchasing numerous policies allows you to ensure that you have adequate coverage to fulfill your loved ones’ needs for as long as they require protection, at a price you can afford. This page will assist in explaining:
- Reasons people get more than one life insurance policy
- How the different types of life insurance policies work
- Common scenarios for having multiple life insurance policies
What are the reasons to get more than one life insurance policy?
The fundamental rationale for purchasing life insurance is to offer “income replacement,” as defined by financial professionals: if you die, life insurance pays a lump-sum cash reward to those who rely on your income. There are two reasons, however, why a single policy may not be sufficient.
One reason for this is that insurance coverage requirements can vary over time. When a couple marries, for example, they may desire some measure of security. They may desire to add more as their children get older – typically significantly more. When the kids are out on their own in 20 years, they may wish to keep a reduced level of life insurance coverage that will last the rest of their lives. (If you’re asking yourself, “How much life insurance do I require?” To assist you in estimating, Guardian provides online tools.)
Another reason why a single life insurance coverage might not be sufficient? There are various types of plans, each with its own set of features – and some of them offer additional cash benefits that can be handy while you’re still alive.
Different types of insurance policies, and how they work.
Term and permanent life insurance are the two most common types of life insurance. Both have their benefits and drawbacks.
Term life insurance is the most popular type of life insurance, owing to the fact that it is often less expensive than whole life insurance (one type of permanent insurance). Term insurance covers you for a set amount of time, or “term,” usually between 5 and 30 years. Despite years of premium payments, there is no longer any protection or recompense from the life insurance provider once your policy expires. You can renew your policy, but because you are older, your life insurance rates will likely be higher. If your health has deteriorated since you first purchased your coverage, your premium rise could be considerably more. Term life insurance can become excessively expensive to renew at that point.
On the other hand, permanent life insurance covers you for the rest of your life. The plans also generate financial value in a tax-efficient manner, which can be utilised in a variety of ways. You can borrow against your cash value, utilize it to make future premium payments, or even cash it out to boost your retirement income. Importantly, your rates are determined by your health at the time of purchase and are unaffected by health difficulties that arise later in life.
It also matters how you obtain your coverage. You can buy a life insurance policy on your own, but many people choose for group coverage, which is usually offered via their employer. A group workplace policy can be less expensive, but the level of coverage is sometimes limited. So, in order to provide your family with the safety they require, consider purchasing another life insurance policy.
Are multiple policies right for you?
While having numerous insurance policies is an option, it may not always be the best choice for you. You may be able to increase the limit of your current policy if you require more coverage. In any case, if you believe you may require more than one policy, your position is likely to be more complicated than the average. We recommend speaking with a knowledgeable financial advisor who can answer your concerns, assist you in weighing the many aspects, and direct you to the right coverage – or coverages – for your requirements. If you don’t have somebody to talk to regarding insurance, Guardian can help you locate a local financial representative who will take the time to learn about your circumstances and give you with solutions that are tailored to your individual requirements and concerns.
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