Life isn’t static – as we grow so do our needs. The reasons for taking out a life insurance policy at 22 may not be the same ones when at 40. Considering these changes, you may consider getting multiple life insurance policies, which is allowed. Other than to cater to changing needs, many people own more than one life insurance policy because they can comfortably pay for it. Below is more about this occurrence and the top benefits of doing so.
Having more than one life insurance policy
Taking an additional life insurance policy is more common than most people think. In fact, if you are employed and already own a personal life insurance policy, the group life cover from your employer makes you a holder of multiple life insurance policies.
It is completely legal and you can get covered by different insurance companies. What’s more, you don’t need to worry about going through multiple medical screening processes for these plans – you can get non-medically underwritten life insurance which allows you to get coverage without needing medical.
All in all, it’s important to remember that regardless of the number of policies one has, there are limits to how much coverage an individual can have. This limit is usually dictated by their income.
Let’s now take a look at some reasons why people opt for multiple life insurance policies, and the benefits of doing so.
Benefits of multiple life insurance policies:
1. Address changes in financial responsibilities
Over time, as we progress through life, our status changes; be it in terms of family size, business growth, or personal development. Similarly, our financial obligations change according to these shifts.
A significant event, such as having a child later in life, or shifting to a house with a bigger mortgage, may necessitate getting several life insurance policies.
Some people may ask, why not replace an existing cover with a better one? Insurance experts advise on getting new life insurance altogether as replacing a current one may be costly, take time, and may result in the loss of certain features.
2. Additional coverage to supplement the employer’s coverage
If you are employed, the chances are good that you already have life insurance cover from your employer. A group life insurance policy ensures the employee dependant’s income is continued when the employee loses their income either due to death or disability.
Group life cover is great because it ensures your dependants’ well-being is secured at little or no cost at all. The only impediment to it is that its coverage is limited to your stay at your place of employment.
Having additional personal life insurance guarantees that your dependent will be taken care of regardless of your employment status.
3. To accommodate shifting financial goals
Life insurance comes in two main forms: Term life and Whole of Life insurance. The former is best suited for covering shocks due to a loss of income while permanent life insurance edges more towards the retirement life.
Keeping in mind that the main purpose of life insurance is to financially safeguard the dependents of the policyholder, it would make better sense to have policies that will address any eventuality. Protecting your family’s future in this way appeals to a lot of people.
4. For an insurance ladder
An insurance ladder is a term used to infer a shrewd manner of stacking up insurance policies to reflect the prevailing financial burden. For instance, rather than take out one life insurance policy with a big death benefit and a cover for your expenses, in the long run, you can use different policies with different face amounts.
For example, expenses are typically high while the kids are still living at home but drastically decline when they move out. It would be beneficial to have more coverage when your expenses are high and less coverage when the expenses later decline.
5. To extend long-term care coverage
The human body starts to deteriorate over time, and you may develop complications you didn’t have when you were younger. Since term life insurance has an expiration date, getting it renewed at a later stage in life may be expensive due to new health complications.
For example, adding a 20-year term life insurance when you are 45 years of age is cheaper than renewing existing term life insurance at age 55.
Conclusion on having more than one life insurance policy
There is no law barring individuals from having multiple life insurance policies. However, there is a limit on how much coverage you can get based on your income and local laws.
Ensuring your loved ones are catered to when you can no longer afford to provide for them may mean taking up an additional life insurance policy. Since this is a long-term commitment, seek an expert’s input before making that final decision.