You only live once, but what if you want to insure that one life multiple times? You can do it, but there are limits.
Let’s discuss the pros and cons of having more than one life insurance policy:
Consider your total coverage amount
The purpose of life insurance is to replace lost income, 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 a new 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 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.
What to know about replacement policies
If you want to replace one policy with another, as opposed to purchasing additional coverage, things get a little more complicated. To learn all about it, click here. The bottom line is that replacement is a somewhat bureaucratic process, and at the moment Haven Term life policies issued by MassMutual cannot be used to replace policies from other insurers (though they can be purchased as additional coverage). In the future, Haven Life intends to offer the option of replacement coverage to customers.
Although you can have multiple life insurance policies from multiple carriers, you can only have one Haven Term policy at a time, and you can’t increase the amount of coverage later, so it’s best to make sure you get the amount that’s right for you at the outset. Luckily that’s very easy to do if you use the Haven Life Insurance Calculator to help you figure out your life insurance 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.
- 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 policy, but why?
So you can have multiple life insurance policies: The question is, do you want them? It really depends on how you like to spend your time.
Applying for term life insurance through Haven Life is simple and quick, but that’s not necessarily the case at other life insurance agencies. Also, even when getting life insurance is quick and easy, how many times do you want to do it?
If you’re considering life insurance for the first time, it’s best to 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: Life insurance is cheaper now than it has ever been, and rates will likely increase as you age.
Michael Davis is a freelance writer and editor who has covered everything from fashion and music to parenting, work, and finance. He has been a chef, restaurateur and record label owner. Opinions are his own.