Do you have life insurance? Good. That brings up the question, could you have multiple life insurance policies? More importantly, should you? When Kathleen, a member of the MoneyTips community, asked this question, many of our financial professionals weighed in from coast to coast.
Gordon Kushnick, an Insurance Agent in Seattle, Washington, puts his money where his mouth is. Not only does he recommend owning multiple policies, he has bought them for himself! He admits, “In fact, I have two life insurance policies: one term policy and one permanent policy.
“Term life insurance is designed to provide financial stability during a specific time period or term. For example, if you buy a house with a 30-year mortgage, 30-year term life insurance is an appropriate product. When the mortgage is paid off, then the financial protection your term life insurance provides is not necessarily needed any longer.
“Permanent life insurance is just that. Maintaining a much smaller permanent plan will insure that no one is burdened, financially, with your final needs.”
Kirby Thomas of LifeInsuranceToday.US in San Diego, California, is in the same insurance boat. “I agree with Gordon. I have temporary and permanent needs for life insurance, so I have term and universal (permanent) life policies. The term policy is matched to a 15-year mortgage; which is to say, that it is a 15-year term. The universal life policy is built to run for the rest of my life. Together, they take care of the temporary and the permanent needs. By the way, the term plan’s benefit is large. The universal life plan’s benefit is small, which fits each need, respectively. You will notice that the need is what guides the purchase.”
Insurance Agent John Cole of Indian Trail, North Carolina, agrees: “Yes, it’s OK to own more than one life policy. Term is for now needs and Index Universal is for long term with savings attached and living benefits, which will help if you get sick and need cash. Term policies have these options also, so with the blend of having both, you can keep this investment from being used up if you do get sick.”
MoneyTips enjoys when consumers chime in to help others in our vibrant community, lending their experience. As an insurance buyer as opposed to a seller, Arin concentrated on pricing. “Yes, you can have multiple insurance policies, but keep in mind you get a discount on the price based on face value. The higher the face value, the larger the break in premium payments.” In other words, the premium for a million dollar life insurance policy should be cheaper than a pair of policies worth half-a-million each.
Michael Zaino, President and CEO of TZG Financial in Charlotte, North Carolina, felt all of the advice was on the right track, but brought up yet another important aspect of life insurance. The financial advisor wrote, “Everyone who’s answered thus far has valid points. I would make sure you ask about ‘living benefits’ that guard against chronic, critical and terminal illnesses as you age and allow you to access the majority of the death benefit while you’re still alive should one of those life-altering events occur. I believe this to be an important evolution in recent life insurance history.”
For more professional and consumer advice on this subject, check out the original question and answers. Join MoneyTips to ask your own personal finance questions to thousands of professionals.
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