Can you have too much of a good thing when it comes to life insurance?

One life insurance policy might seem like plenty for most people, but it’s actually permissible to own multiple policies – and can make sense in some cases. Depending on your situation, having multiple life insurance policies can help protect your family and take care of your unique needs.

Here’s how it works.

Can you have multiple life insurance policies?

There are a few situations where it might make sense to own multiple policies, such as:

• Supplementing a group policy. Employer-provided group life plans often seem like a good deal because they’re low-cost or even free to you. But these plans’ one-size-fits-all approach means that you might end up without enough coverage. An individual plan helps fill the gaps and offers protection if you ever change careers, since employer-provided coverage usually ends along with your job.
• “Laddering” policies for varied coverage over time. The “ladder” strategy involves buying multiple life insurance policies that end at different times, so that your coverage grows or shrinks as your needs change. Instead of a single 30-year policy with $1 million in coverage, for example, you could buy several overlapping policies that offer more protection while you’re raising kids or paying off a home, and less as you approach retirement.
• Supporting growing financial needs. Life changes often mean bigger life insurance needs, from a new baby to a mortgage. In some cases, buying a new policy can cost less than increasing the coverage on an existing one. Different types of policies can also serve you better at different stages of life. For example, someone with a few years left on a term life insurance plan may want to also buy a small final expense policy to make sure their family can cover end-of-life needs.
• Protecting a business. Some people have completely separate life insurance needs, especially business owners. When it comes to choosing the best coverage for both scenarios, it can make sense to have one policy to protect your family and another to cover your business assets.

How many life insurance policies can you have?

There’s no official limit on the number of policies you can own. In general, term life insurance providers are more interested in your total amount of coverage than your actual number of policies.

When you apply, your insurer will make sure that the amount of insurance appears reasonable in relation to your finances. If your income, assets, and liabilities don’t justify the amount, providers may turn you down for extra insurance. For example, if you make $25,000 a year and apply for $5 million in insurance, you probably won’t qualify financially.

Applying for multiple life insurance policies

It is possible to apply for multiple policies at the same time, but the process often gets complicated and may lead to you being rejected for similar coverage by several providers.

Life insurance companies share information about applicants and policies through the Medical Information Bureau (MIB). When you apply for a policy, providers will check to see if you have any other applications on file. People who apply to multiple insurers can end up being denied because it may look like you’re trying to get more coverage than you need. Essentially, insurance companies want to make sure you’re not worth more once you’re gone than you are alive.

If your applications do go through, the process could be delayed as providers take a closer look at background documents like W2s or tax returns or require additional medical screening to check your insurability.

While it’s smart to compare quotes when you shop for insurance, working with one insurer or life insurance agent once you’re ready to apply is the best way to find a good fit for your situation. If you decide to buy multiple policies, agents will help you split your coverage across your plans so you don’t run into issues.

What to keep in mind when managing multiple policies

Buying a life insurance policy (or several) is always more affordable when you’re younger. If you think you’ll need more insurance later, consider buying now to lock in the lowest rates. Buying an additional policy years down the road will mean higher monthly premiums and higher total costs over time.

Looking for an alternative to buying multiple policies? Life insurance riders are optional additions that can increase the scope of your current policy. While adding life insurance riders to your policy can increase your premiums, they offer extra protection without going through an additional application process.

Fidelity Life offers a range of life insurance riders for extra protection, such as:

• Accidental death benefit: Covers you if you die unexpectedly in an accident and can be expanded to include your spouse and children
• Accelerated death benefit: Allows you to use a percentage of your death benefit early if you’re diagnosed with a terminal illness
• Child insurance policy rider: Gives you the ability to cover funeral expenses or take time off work if one of your children passes away

In some cases, you may also be able to adjust your policy by increasing your coverage on your existing plan.

As a multiple policy owner, you’ll want to make sure that your death benefit amount keeps up with your changing needs. Keep track of each policy’s expiration date and benefit amount and review them regularly, especially during big life changes like a wedding, baby, new job, or mortgage.

Still have questions?

Everyone’s insurance needs are different, and sometimes a single policy isn’t enough. At Fidelity Life, we’re here to help you get the coverage you need, no matter what that looks like. Give us a call to talk to an agent, learn about insurance quotes or start your online quote today.

At Fidelity Life, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed, and updated regularly to ensure the information is as relevant as possible.