Most people never really think about adding more life insurance once they buy a policy. They figure they have that policy and insurance through their job. However, what if you wanted to have more coverage? This recent article from Nerd Wallet, “Can You Have More Than One Life Insurance Policy?” explains some life insurance basics.
First, you can own several policies from different companies. However, when you apply, insurance companies will inquire about your existing coverage to make certain that the amount you want is reasonable.
It’s not uncommon to purchase a lot of coverage without any problems. An insurance agent will usually ask why you need a great amount of coverage, if the total coverage would exceed 20 to 30 times your income.
The reason to purchase life insurance coverage is to replace income in the event that the main income-earner passes away prematurely. One type of coverage to pursue is term life insurance. This policy will cover you for a certain period, like 10, 20, or 30 years. Hopefully, when the term expires, you won’t require that life insurance, because your debts are paid, and you’ve finished raising your family.
Rather than purchasing one large policy, you could get multiple policies of different lengths and amounts to match your family’s needs over time. As an example, instead of getting a single 30-year $1 million policy, you could buy three policies: a 10-year for $500,000; a 20-year, $300,000 policy, and a 30-year, $200,000 policy. This type of “laddering” strategy can save money, and it can work, if coverage needs decrease.
Note: if you decide to buy just a single policy and discover later that you don’t need as much life insurance coverage, most carriers will let you lower the coverage and pay less.
There are also other reasons to buy coverage, besides replacing income. These can include small-business owner needs, long-term care, estate planning, and the biggest being to protect your family. You can’t know what will happen in life, so it is best to be prepared.
Before you select a life insurance policy, speak with your estate planning attorney. They’ll be able to explain the role that insurance plays in estate planning and outline your general insurance needs.
To learn more about this and other estate planning topics, visit our website and schedule your consultation today!
Reference: Nerd Wallet (September 17, 2018) “Can You Have More Than One Life Insurance Policy?”