Can You Have Multiple Life Insurance Policies At The Same Time?

Absolutely. You could have 10 insurance policies at the same time if you wanted to.

What are some reasons for having multiple life insurance policies?

1. Diversify your life insurance investments with policies from different companies
2. Extend your existing life insurance coverage.
3. “Stack” multiple policies to obtain the coverage needed
4. “Ladder” term life insurance policies.

1. Diversify your life insurance investments with policies from different companies:

Some individuals want to make sure they’re covered no matter what happens with an insurance company, so they purchase policies from different companies. Other people choose to get two policies for different terms while they are young and healthy. One policy for a short term period, and another for either a longer term or a permanent policy.

Option 1 – Two term policies

• Banner $250,000 20-year term policy ($12.94/month)
• AIG $250,000 20-year term policy ($12.95/month)

$500,000 in coverage for 20 years from two policies

Option 2 – One term policy and one permanent

• Lincoln $400,000 20-year term policy ($10.52/month)
• Sagicor $100,000 permanent universal life policy ($42.75)

It is a great idea to mix term and permanent insurance. One policy protects your children until they are grown, and the other policy provides cash for your legacy.

2. Extend your existing life insurance coverage:

If you have a term life insurance policy that is nearing expiration, you may want to extend your policy with a new one. There is no reason why you cannot have two policies at the same time.

For example:

You may find yourself with one year left on a 10-year $200,000 term policy and want to start a new 10-year 200,000 term policy.

Helpful Tip:

It can be difficult when applying for a policy that is meant to “replace” one you already have. It involves quite a bit of extra paperwork because the new insurance company is tasked with canceling the old policy. It is easier to get the new policy and cancel the old one yourself.

3. “Stack” multiple policies to obtain the coverage needed:

Some insurers may be looking for a specific amount of coverage, but may not qualify for the amount they need from a single company. They may instead choose to “stack” policies to get to their desired level of coverage. We see this most often with Guaranteed Acceptance policies because they have lower coverage limits.

If you need $90,000 in life insurance coverage you can stack:

• $25,000 on an AIG policy,
• $25,000 on a Gerber policy, and
• $40,000 on a Great Western policy.

For example:

Helpful Tip:

The stacked guaranteed acceptance policy strategy can be beneficial for the following situations:

• For divorces, stacked guaranteed acceptance policies can guarantee child support payments in the event the individual pass away.
• Business owners can stack guaranteed acceptance policies to help secure small business loans, fund buy-sell agreements, and protect their interests in their company.
• You can stack guaranteed acceptance policies to make sure there is plenty of money available to cover your final expenses when you pass away.

4. “Ladder” multiple term life insurance policies:

Similar to stacking, you can also “ladder” a collection of term life insurance policies, with coverage that decreases over time, to affordably reach your desired coverage goal. We see this when families have multiple children. As each child reaches age 21, they lower their total life insurance coverage amount.

Here’s one way you could ladder your policies over a 30-year period

• A $500,000 policy with a 10-year term
• A $250,000 policy with a 20-year term
• A $250,000 policy with a 30-year term

For example:

How much life insurance coverage can you combine?

The limitation is the maximum amount of insurance you are allowed, based on your financial situation.

Most insurance companies determine how much you can have in total based on your income. This is why insurance applications ask whether you own additional life insurance policies.

The below table is an estimate of the maximum amount of life insurance a person and have.

How can you figure out the best strategy for having multiple life insurance policies?

If you’re still not sure how you can make multiple life insurance policies work for your situation,  reach out to a knowledgeable life insurance agent here at True Blue! Our agents have the know-how to help you find the policies that will best fit your needs.

Because it is difficult to request multiple policies on our quote comparison engine, let us do the work for you!

Give us a call: (866) 816-2100

• About the Author

About Brian Greenberg

Brian is the CEO and Founder of True Blue Life Insurance. Brian is licensed to sell life, health, annuities, and property and casualty insurance in all 50 U.S. states. He is the author of The Salesman Who Doesn't Sell and is a member of the Million Dollar Round Table, an organization that consists of the top 1% of financial advisors worldwide.

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