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How Many Life Insurance Policies Do I Need?


Financial planning is not always cut and dried. Changes are likely to occur in a person’s life, and financial needs and goals shift along with them. Life insurance is part of the financial picture for a good portion of our lives. It may increase as our responsibilities increase and decrease as we accumulate more assets. There may be times when it suits a person’s needs to have more than one life insurance policy. There is no limit to the number of policies you can purchase.

Why Have Multiple Life Insurance Policies?

It is not uncommon to divide life insurance coverage among multiple policies. Any given individual may have, for example:

  • A large term life insurance policy for coverage
  • A smaller policy included in the mortgage payment
  • Balance life insurance on credit cards
  • A small whole life policy purchased during the individual’s childhood

A man or woman with a family may have term life insurance to provide protection for the family until the children are grown and have completed their educations. The same person may also have a universal life insurance policy for the investment options and lifelong coverage it provides.

What Happens When You Increase Your Life Insurance Coverage?

Insurance companies are typically concerned with the total amount of coverage you have, not the number of policies. As you add more life insurance coverage, your insurer will likely examine your physical condition and health more closely. A complete physical examination may be required if you want to significantly increase your total coverage with any one insurer.

What Are the Pros & Cons Of Buying Multiple Life Insurance Policies?

There are pros and cons of purchasing multiple policies to obtain additional life insurance coverage. One advantage is that dividing coverage among more than one insurer can help you avoid a full physical and close scrutiny of your health and help protect your privacy. Another advantage is the flexibility it gives you to purchase the best product for each purpose and to tailor policies to suit your needs.

On the con side, it costs more to buy multiple small policies than a single larger policy, as underwriting costs account for a significant portion of policy premiums. Additionally, if you are aware of certain health problems and buying multiple policies to avoid close scrutiny, your policies could be invalidated if that fact is revealed.

Alternatives To Buying Multiple Life Insurance Policies

Instead of purchasing and dropping life insurance policies to suit your changing needs, consider buying term insurance riders for an existing policy. Term riders are small policies piggybacked on your main coverage. They usually cost less than a standalone policy because the underwriting was already done when your main policy was issued. If you have a term life insurance policy and want to add permanent coverage, in most cases, you can simply ask your insurer to convert part of your term policy to permanent insurance. This strategy has the advantage of not requiring further health checks. Our experienced agent will work with you to find the best life insurance options to suit your needs.

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