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Can You Have More Than One Life Insurance Policy?

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Many people purchase life insurance policies to make sure their loved ones are taken care of after they pass. But that brings up the question, “Can you have more than one life insurance policy?” The answer is yes, but there are some things you should understand before you buy more than one insurance policy.

Reasons to Have More Than One Life Insurance Policy

There are many reasons why someone may want to purchase more than one insurance policy. For instance:

  • You own a business and want one insurance policy to cover your family’s needs and another to take care of the business obligations.
  • You want to leave your family a large inheritance and want a separate policy for that, along with a policy that will cover any outstanding debt such as mortgages, car loans, or other financial obligations.
  • You want to make sure that your final expenses are paid for when you pass. Burial insurance pays out faster than other insurance policies – in about 24 hours – and that relieves the financial burden from your loved ones.
  • You want to supplement your employer-based life insurance policy. That type of policy will expire if you leave your job.

When some people ask, “Can I have more than one life insurance policy,” they are thinking about an insurance method called laddering. The concept behind the method is to “ladder” multiple insurance policies according to your family’s needs over a lifetime.

Here is an example of how to ladder term life insurance policies:

Insurance Policy Laddering
Ten-year $100,000 term life insurance policy If you die within these 10 years, all three policies will pay out. This will cover large expenses like paying off the mortgage and providing your family with enough money to live. They would receive $1 million.
Twenty-year $300,000 term life insurance policy If you die within 20 years, the first policy will have expired, but your family will still receive $500,000 from the last two policies. This will help cover any college expenses or pay the living expenses of people who still rely on your income.
Thirty-year $200,000 term life insurance policy If you die within 30 years, the other two life insurance policies will have expired. That leaves your family $200,000 in benefits. Your children are likely grown and financially independent and the money can help pay off any outstanding debt like a mortgage.

Types of Life Insurance to Consider and Why

When choosing multiple insurance policies, you will have a few options. Each type of life insurance product serves a different purpose, which is why many people combine them to create their ideal mix.

Here are the types of insurance policies you may want to consider when thinking about buying more than one policy.

  • Term life insurance. This type of insurance policy is good for only a term and is the least expensive. People purchase this type of policy when they want to ensure that large debts are paid off when they pass. For example, if you have a mortgage of $200,000, a term life policy of that amount will ensure it is paid off when you pass.
  • Whole life insurance. People use whole life insurance policies when they want to leave a large inheritance to their loved ones. The policies never expire as long as you pay the premiums, and the premiums never change.
  • Final expense life insurance. This is a type of whole life insurance, meaning that the premiums will never change and as long as you pay them, the insurance will never expire. People purchase this type of life insurance to ensure that their final expenses, including their funeral, is paid for when they pass.

Limitations and Concerns on Holding Multiple Life Insurance Policies

When stacking – or laddering – insurance policies, you will need to take some things into consideration. For instance, you can choose how the death benefits are disbursed. Additionally, insurance companies will cap the amount of your policies.

Payout Concerns

Thinking about how the death benefit of your life insurance policies are paid out will give you peace of mind and possibly prevent unnecessary stress for your loved ones. For example, in the laddering example above, if you were to pass within ten years of taking out the policy, your loved ones would receive $1 million. That’s a lot of money, and some people may not understand how to handle it so that it will last.

Here are some of your payout options:

  • Lump sum payout. In this instance, the beneficiary would receive the entire death benefit all at once. While it does allow them more flexibility, it can also be overwhelming to some.
  • Retained asset account. You can opt to leave the money with the insurance company. It will issue the beneficiary a checkbook to use for the account. The account will earn some interest, but the money would likely earn more in a high-yield savings account.
  • Life income payout. If you would rather your beneficiaries receive a set amount of money every month, you can convert the payout into an annuity. The younger they are, the smaller the monthly payment would be because the money has to last for more years.
  • Life income within a certain period. You can also set up payments to go to your beneficiaries for a certain amount of time. The benefit to this option is that if your beneficiaries were to pass during the set time period, the payments will continue by going to their
  • Specific income payout. With this option, you designate the amount of the payout and how often it is paid. For example, if you have a $500,000 insurance policy, you can designate that the beneficiary receives $50,000 a year for ten years.

Coverage Limitations

Insurance companies do place some restrictions on the amount of coverage that you have. One reason they do this is to ensure that you are not worth more to someone dead than you are alive.

When insurance companies place caps on total coverage, they use your age, income, or net worth to determine the number. Insurers may also consider your health, the type of job you do, and any hobbies that may be considered risky or dangerous.

Although each insurance company is different, the following chart shows how most insurance companies determine this amount.

Insurance Coverage Caps
40 years old and younger 25-35 times your annual income
40 to 50 years old 20-25 times your annual income
50 to 60 years old 10-20 times your annual income
60 to 70 years old 5 times your annual income
For estate planning rather than income replacement 80-85% of your net worth

It’s important to remember that, while there is no limit on how many insurance policies you can have, insurance companies will limit the amount of coverage you can have. The numbers above reflect the total amount of your policy coverage – they are not for each policy.

Why Final Expense Insurance Is Important to Add to Your Life Insurance Coverage Portfolio and the Benefits of Doing So

Final expense insurance, also known as funeral insurance or burial insurance, is a great addition to a life insurance plan. That’s because this type of insurance operates differently from others.

For starters, the face value of burial insurance is typically under $20,000. The policies are primarily used to pay for funeral expenses, as well as any outstanding debt such as utility bills or car payments. When someone dies, their family often has to pay outstanding debt and funeral costs, which can be a burden.

Another reason to consider this type of insurance product is the speed at which it pays the death benefit. Good insurance companies like Lincoln Heritage understand that the rising costs of funerals can be a strain on families. That’s why they pay out approved insurance claims within 24 hours. This ensures that the loved ones of the deceased won’t have to come up with thousands of dollars for a burial.

Finally, the Lincoln Heritage Funeral Advantage® plan includes a membership with the Funeral Consumer Guardian Society that provides support for people who are grieving the loss of a loved one. It is a confusing time, and not everyone can negotiate funeral prices and make arrangements during this time. Funeral Consumer Guardian Society offers support services to families helping to ease the process.


Q: How many life insurance policies can I have?

A: There is no legal limit to how many insurance policies you can have, but insurance companies do put a cap on the total payout.

Q: Is the total payout cap for multiple life insurance policies for each policy?

A: No, the total payout cap designated by the insurance company is for all your combined insurance policies.

Q: Why would I need more than one life insurance policy?

A: There are many reasons why people want more than one life insurance policy. For instance, they may want a separate policy for their business, or they may want to ensure that their funeral is covered by a smaller policy that will pay the death benefit faster.

Are Multiple Life Insurance Policies Right for You?

You asked, “Can you have multiple life insurance policies,” and we gave you a lot of good information to think about. Some people have complex financial situations, and multiple insurance policies will help them cover every need. Some people buy burial insurance to ensure that their final expenses will be taken care of faster than it would be with a traditional life insurance policy.

If you’re thinking about adding funeral insurance to your life insurance mix, contact Lincoln Heritage now to get more information.