Can You Have Multiple Life Insurance Policies?
Yes, you may purchase multiple life insurance policies. Many people who purchase life insurance purchase multiple policies for different reasons. Learn from the life insurance lawyers at Boonswang Law about the types of life insurance policies available, the reasons for owning multiple life insurance policies, why the amount of life insurance you own can be limited, and what alternatives you have to owning multiple policies.
Owning Multiple Life Insurance Policies
When you own more than one life insurance policy, you must complete separate applications and medical questionnaires for each policy. Be sure that the information you provide is accurate and consistent across all policies. If it is not, you risk an allegation of life insurance misrepresentation and the chance your beneficiary or beneficiaries do not get their payout.
Be sure to organize your policies so that you know when premiums come due, and pay them in full and on time. If you miss a premium payment, you risk life insurance lapse and termination, and again, the life insurance company will deny your beneficiaries’ claims. Lapse is one of the most common reasons life insurance companies deny claims for death benefits.
Reasons to Have Multiple Policies
Common reasons to have more than one life insurance policy include:
- Naming an ex-spouse as beneficiary, and wanting to name a current spouse or children as beneficiary to an additional policy
- Having a whole life policy and a term life policy
- Having group coverage through an employer as well as individual coverage
- Laddering policies of different terms to provide coverage as life changes
- Owning a life insurance policy and an end-of-life expenses policy
- Owning life insurance for a spouse and another policy that is in a life insurance trust to care for a disabled loved one
Limits On Your Life Insurance Amount
The amount of coverage you can purchase will be limited by factors such as your age, health, occupation, and net worth. For example, someone who works at minimum wage and is 65 years old will not be able to purchase a $1,000,000 policy.
When you apply for an additional policy, the life insurance company takes into consideration the amount of coverage you already have when determining the amount of coverage they will offer you.
Differences in Life Insurance Policies
These are the various types of life insurance:
Term Life Insurance
This is the most common type of life insurance. Someone purchases a set amount of coverage for a term, say, 10 or 25 years, and if they die within the policy term their beneficiary or beneficiaries receive the face amount of the policy as a death benefit.
Whole Life Insurance
Whole life insurance can work like term life insurance as far as payouts to beneficiaries goes, but unlike term life, whole life accrues cash value as the insured pays premiums. The insured can borrow against that cash value subject to some restrictions.
Group Life Insurance Through an Employer
Employers often offer life insurance coverage to their employees at no or little cost, as a benefit to employment. The amount of coverage will likely be a multiple of the employee’s annual salary. If the employee leaves their job, they have the option of converting their coverage to an individual policy.
Funeral Expense Insurance
These types of policies typically are inexpensive and have a face value of $10,000 or $15,000. Funeral Expense policies pay end-of-life and funeral expenses.
Multiple Life Insurance Policies Alternatives
Instead of purchasing more than one life insurance policy, one might consider naming a beneficiary to their savings account, checking account, investment account, retirement account, or pension. For example, someone who has purchased the maximum amount of life insurance coverage they are eligible for should consider these alternatives when planning to provide for loved ones should they die.
How An Experienced Life Insurance Lawyer Helps
If you own multiple life insurance policies, you must organize this documentation so that when you die your beneficiaries will be able to access and understand the coverage you have.
If you struggle to understand multiple life insurance policy coverage, call us. Our experienced life insurance lawyers have helped beneficiaries across the country understand their rights and get the benefits they deserve. Call 1-855-347-1279 today to discuss your case – free of charge!