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Yes. There are quite a few reasons why some people choose to hold more than one life insurance policy.
Types of Life Insurance Policies
Term life insurance policies cover you for a specific length of time, ranging from five to 30 years. For a low, level monthly premium, you can purchase a death benefit of $250,000, $500,000 or more that would go to your beneficiaries if you die during the term of your policy.
Permanent life insurance policies cover you for the duration of your life. As long as you continue to pay your regular monthly premiums, you retain your coverage and keep your policy in force. The death benefit of these policies is can also be up to $250,000, $500,000, or $1 million. With a permanent life insurance policy, you also have a living benefit called the policy’s cash value. This money is kept in an account by the insurance company, and it grows over time according to a set interest rate. During your lifetime, you can make withdrawals from the cash value or borrow against it. Any unpaid loans will reduce the size of the death benefit by that amount, with interest.
Why Get More Than One Policy
When you purchase life insurance, you ensure financial protection for your family or loved ones. The death benefit provides the funds needed to pay for final arrangements and medical bills, settle debts, pay rent, and handle other expenses to maintain your family’s quality of life. Sometimes your circumstances change, and you find yourself needing more coverage. That may mean purchasing a second life insurance policy.
If an individual or couple decides to have children, they automatically need 18 or more years of financial support to prepare for. A term life insurance policy of 20 years or more can help ensure that the child or children will be able to support themselves if the family were to lose the parent’s income. Life insurance can also help with things like childcare and tuition costs.
The cash value of permanent life insurance policies can motivate someone to invest in whole or universal life. That money can help supplement your income during retirement.
You can purchase both a permanent and a term life policy. By choosing a permanent life policy that is only just large enough to cover your family’s needs, you will have coverage for life without having to pay as expensive of premiums. Then you can purchase a term life policy when needed to get extra coverage to help pay a mortgage, provide for children, fund a business, or other reasons.
You can often purchase a life insurance package as part of your employee benefits. This coverage may not be enough to fulfill your family’s needs. Those policies will likely not continue to be affordable if you stop working for that employer. To supplement that coverage, you can add a term life policy or a permanent life policy based on your needs and budget.
Some people even choose to purchase multiple term life policies at once while they are in good health for varying term lengths and coverage rates. If you are concerned that your health might worsen before your term is up, you can get a different term policy for overlapping coverage at a better rate than it would have been if you were in poor health when the first term expired. You could also purchase two or three policies at once with the highest coverage amount for the shortest term length and a smaller coverage amount for the longer term or terms. This may secure you better rates.
Are you considering life insurance? The advisors at Insured for Life can help you select a life insurance policy or policies that will get you the protection you need within your budget. Contact us now to schedule an appointment.
