Can you have more than one life insurance policy?

You only live once, but what if you want to insure that one life multiple times? Can you have more than one life insurance policy? You can do it, but there are limits.

The benefits of life insurance, even if it’s just one policy, can have a tremendous impact. But from the type of life insurance plan to the coverage amount, there’s a lot that goes into life insurance, especially when thinking about multiple policies. Let’s discuss the pros and cons of having multiple life insurance policies:

Consider your total coverage amount

The purpose of life insurance is to replace lost income after a death, not to generate new income, so companies try to ensure you’re not overinsured and that the value of your policy relates to your income.

If you have life insurance and are thinking of taking on an additional life insurance policy, an insurer will consider the value of all your existing policies. For example, if a person would qualify for $500,000 of coverage and already has $100,000 of coverage with life insurance Company A, Company B will probably approve them for a maximum of $400,000 of coverage. The other reason for this (in addition to avoiding overinsurance) is that life insurance companies want to make sure their customers can pay the premium. If a person has substantial life insurance coverage with little relation to their salary, there’s a danger their premium could be higher than they can afford.

And note: If you are approved for additional coverage with Haven Life, you can carry up to $3 million total (including your previous policy) in coverage.

What to know about replacement policies

If you want to replace one policy with another, as opposed to purchasing additional coverage or a second life insurance policy, things get a little more complicated. The bottom line is that replacing an existing policy is a somewhat bureaucratic process, and at the moment Haven Term life insurance policies issued by MassMutual or its subsidiary C.M. Life cannot be used to replace policies from other insurance companies (though they can be purchased as additional coverage).

In general, it’s simplest to make sure you get the amount that’s right for you from your life insurance company. Luckily that can be easy to do if you use the Haven Life Insurance Calculator to help you figure out your insurance benefits and needs.

Understand how group life insurance works

One common scenario in which people have multiple life insurance policies is when they have coverage from their job, as part of their benefits package, as well as a policy of their own. Coverage from work, known as group life insurance, is often cheap and worth getting, but it’s important to note that it may be insufficient on its own.

For example, if you’re offered life insurance equivalent to one year’s salary from your job for a small annual payment, by all means take it, but consider these two points:

• The amount of coverage from group life insurance may not be enough to meet your family’s needs if you die. (Reminder: A classic life insurance “rule of thumb” is to have 5 to 10 times your income in insurance coverage.)
• You may not be able to take that group life policy with you if you leave your job, or it could be prohibitively expensive to do so.

If that’s the case, you should consider getting a life insurance policy of your own in addition to employer-provided group life insurance.

You can have multiple life insurance policies, but why?

So you can have multiple life insurance policies: The question is, do you want them? It really depends on a number of factors. If, for example, your financial situation has changed — you got a new (or better-paying) job, your family has expanded (congrats!), you’re concerned about long-term care, you bought a new house, and so on — it might be worth making sure you still have an adequate amount of term life insurance coverage. Another reason you might want multiple insurance policies is if you’re thinking of laddering insurance policies, a somewhat complicated approach that might be best considered through your financial adviser.

Fortunately, applying for coverage through Haven Life remains simple and easy, whether it’s your first term life insurance policy or a subsequent policy. (And even if you don’t think you need additional financial protection, it’s still a good idea to check your term life insurance policy at least once a year.)

If, however, you’re considering life insurance for the first time, it’s best to try and choose the right amount of coverage at the start, especially since this allows you to lock in a rate while you’re young, healthy and relatively cheap to insure. If, on the other hand, you already have coverage but need more, now is the time to buy it: Haven Life now offers newer, lower rates for many qualified applicants, and rates will likely increase as you age.