Can I Invest In 2 Life Insurance Policies At The Same Time?
Updated On Aug 29, 2021
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While you will need a good financial reason to increase your death benefit, like taking on a large loan, you might like to buy coverage just for the length and amount of that loan. Some people buy multiple policies that expire as they age to save money on their premiums over time. However, submitting insurance applications to multiple companies at the same time can cause confusion and may result in being denied coverage if an insurer thinks you’re hoping to get more coverage than you actually need. A financial adviser or independent insurance broker can help you decide which type of policies to buy.
Why You Might Want Multiple Life Insurance Policies?
Many people opt into the group life insurance offered by an employer because it’s subsidized in part or whole by their company. But those policies don’t offer as much coverage as you actually need. Even if you already have a private policy separate from the one offered by your employer, there are a few situations in which it could be advantageous to take on another.
1. You Need Additional Coverage
Life insurance is meant to encompass the needs of your income, your debts, and your dependents. If you experience major life changes — buying a house, getting married, having a child, or starting a business, — that significantly impact your finances, it makes sense to increase the amount of life insurance coverage you have. That could mean buying another life insurance policy rather than increasing the coverage limit on your current policy.
Must Read: Term Insurance Plans With Maturity Benefits
2. You’re Undertaking An Advanced Financial Strategy
There are many ways to make life insurance part of your long-term financial plan. The most common is called the ladder strategy, which involves buying multiple term life insurance policies with different term lengths that expire as you pay down your debts.
3. You Want To Mitigate Risk
It’s rare for a life insurance company to go out of business, and rarer still for there to be no resolution in place if a company does face that worst-case scenario. But you may not like the idea of relying on one company to guarantee your beneficiaries’ future financial support. If guarding against this risk is extra important to you, holding policies with multiple companies allows you to spread that risk across more than one provider. If one does go out of business, your beneficiaries won’t be without financial protection while you sort out the coverage you had with the defunct insurer.
Can You Apply To Multiple Insurance Providers At Once?
Technically, you can apply for a policy with several life insurance companies at the same time. But it rarely makes sense to do so because having multiple life insurance applications out can overcomplicate the application process. If you want to buy more than one policy at the same time, an insurance agent or broker can help you get the details right, and it may be more efficient if you work with one insurer.
If you apply to two insurers at the same time to see which offers the lowest premiums, you could be denied by both because it looks like you’re trying to apply for double the coverage amount that you actually need. At the very least, your applications could be delayed while the insurance companies sort out the information on your MIB report, and you may have to undergo multiple medical exams.
Buying multiple life insurance policies can be a smart way to get additional coverage to insure against a specific debt, like a mortgage, or if you want to implement a more complicated financial strategy, like the ladder strategy. Avoid applying to multiple insurers at the same time to prevent complications and delays, but do work with an agent or independent broker to make sure that you are getting the right policies and prices for your needs.
Also Read: How To File A Claim For Term Insurance?
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.