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5 Reasons Why You May Need Multiple Life Insurance Policies

March 22, 2021

The life insurance you may have needed in your 20s might not be the right fit for you anymore. After occurring, significant life changes like getting married, buying a home, having children, etc., could have shifted your priorities and increased your income needs. The simple term policy you purchased 12 years ago might not be enough to cover a loss today.


Because of this, it's completely normal to end up with multiple policies, even some that overlap! Many financial professionals even recommend a combination of multiple policies to ensure maximum protection. However, be sure to avoid applying for and buying multiple policies at the same time. Many insurance companies would see this as fraud, and you may even face legal consequences.


There lies the benefit of having an insurance specialist or financial professional to help guide you through the complicated and challenging buying life insurance process.


Below are a few of the most common reasons people have multiple life insurance policies

1. Not enough coverage from the employer plan.

Many employers offer a group life insurance plan to their employees at little to no cost. While this may sound great upfront, there are a few downfalls. If you were to change jobs, retire, or be fired, all coverage from your employer plan would be lost. Another common downfall is the lack of coverage. Employer plans typically provide lower death benefits along with their lower premiums. Not securing enough coverage could leave significant expenses on the table for your loved ones, such as a mortgage or schooling.


An employer life insurance policy is a good start, but your life insurance should grow with you as you continue to grow. It is prevalent for individuals to have both an employer and personal life insurance policy.

2. Growing family

If you purchased a life insurance policy while you were young and single, you likely selected a lower death benefit to have more affordable premium payments. But if you now have a growing family (a partner, mortgage, children, etc.), you will likely need a more comprehensive policy to cover any added expenses over the years.


A term life policy you bought nine years ago will eventually expire. Without a return of premium rider, all that cash is lost to the insurance company once your coverage lapses. Most people chose to adopt another policy rather than extending a term that no longer covers their needs.

3. You want to build wealth.

There are more benefits to life insurance than providing income to loved ones once you've passed. And while most people choose term life policies due to their affordable premiums, permanent life insurance such as whole life or universal life policies will never expire and may even offer living cash benefits.


It is essential to consult your financial and tax advisors when considering using a life insurance policy to build wealth. Based on your goals and budget, they can help you find a policy, or combination of policies, to meet your needs not only now but also in the future.

4. Planning for Retirement

Planning for retirement is stressful enough without considering what an unexpected death could do to your finances. Having a life insurance policy in place is a form of income protection should any tragedy such as illness or death occur unexpectedly.


While life insurance should not be the only form of retirement income you rely on, it can be a nice compliment to a roundabout financial plan. It is never too early to begin retirement planning, and investing in 401(k)’s, IRA’s, and life insurance early can help you get a head start on financial security.

5. Loans and debt

Debt is a burden to many - not just in life but also in debt. If you have student loans, a mortgage, or car payments, these loans do not expire on your death. Your loved ones are forced to shoulder these burdens upon your death, whether they can afford them or not.


A life insurance policy offers your loved ones, or even business partners, to wipe the slate clean in the event of your death. Many business lenders require insurance policies to be taken out on key employees to cover their losses in the wake of an unexpected tragedy. This is another way to end up with multiple life insurance policies.



There are many reasons to take out additional life insurance policies; however, many people find themselves with plenty of coverage through a single policy. If you're interested in seeing how life insurance could help you, contact us today to see how we can help you get covered.