The answer here is a resounding YES! When you go through the process of examining your situation and determining how much life insurance you need, many people cannot, or aren't willing to, pay for it all. In these cases, I recommend assigning a priority to each risk, and covering the most important first. As you can afford it, you can purchase additional policies at later dates.
Timing is also a factor. Some risks are temporary while others are permanent. For example, a mortgage or college education for your children have an expiration date while your income or living expenses do not. For many of my clients, we will buy term insurance to cover the temporary risks and permanent insurance to cover the permanent risks.
Insurance companies, for the most part, aren't concerned with how many different policies you have, they're concerned about the total amount of coverage you have among all the policies. If money was not an issue I would recommend all permanent insurance as it's the least expensive in the long run. However, many people cannot afford to do this and end up purchasing both permanent and term insurance as their budget allows. The most important thing is to purchase the right amount first, even if it's all term insurance. Once you lock in your insurability you can always convert that term to permanent as your budget allows.
As always, find an advisor you can trust and listen to their advice. We deal with this every day and have specialists at our home offices for more complicated issues. We can usually find the right coverage at a price you can afford.
Yes, one person can have multiple policies. The type of policy that works best for one need may not be best for another. And some people simply like to spread their coverage around to different companies, just as they like to diversify their financial portfolio.
You must be financially qualified for the sum of life insurance that you own, or for which you are insured. That is why life insurance applications will ask if you have other policies, and if you are replacing any of them. The amount for which you are financially qualified is based on your age, income, assets, and in rare situations, health factors.
A person can own as many Life Insurance policies as they desire if they qualify for the coverage and can pay for them. The biggest problem is that without proper counseling the policy may not fit the need that the person was purchasing the policy for. Many policies are put on the market to meet specific needs and because of the public knowledge a person may buy a policy that they thought meant one type of coverage when in actuality it was completely different coverage. Over my lifetime I have worked with persons who would buy term policies when in their mind they had mixed them up with policies which are paid up early, ie, ten pay life, etc. I have met more than one individual who through the years had bought 10 year term thinking it was like ten pay life and that it would be paid up in ten years. I want to stress here that buying a Life Insurance policy without understanding all of its reasons for existence is like buying any auto with four wheels without knowing anything further.
I would also like to point out that most Life Insurance policies have what is called a "policy fee" that is attached to the premium of the policy. What this means is that the company is charging fifty to sixty dollars per year for the administration of that policy and there is no coverage on that amount of the premium. I have had people want several smaller policies to avoid taking a medical. This also can be a mistake since most companies have discounts on the larger amounts of Life Insurance on an individual.
In today's life you can find an individual who has knowledge in all fields of finance. If that person is living up to the pledges made to become an agent they will educate the client and help them purchase the proper Life Insurance and investments without sales pressure. A good agent builds clients for a lifetime! Allen D. "Al" Mitchell, Ph.D., CLU, FLMI Author "The Prophets Dollar" second edition.
President, Lane Independent Agency, Southern California
Yes, with a proviso. You can have multiple life insurance policies, but only up to the face value combined limit of what would be reasonable, based on your income and situation. For example, if you earn $50,000 a year, and want a $5 million policy combined limit (say 5 policies of 1 million each), that would not be permitted. The reason is that it would be too tempting for someone to due this, then wait two years, and commit suicide, to provide large amounts of money to their family. That is not the purpose of life insurance. It is meant to REPLACE lost income. Not to be a lottery. So, within reason, you could say buy five or perhaps even ten times your annual income. But do not expect to buy one hundred times it, in combined policies. And realize that by splitting up the policies, you gain nothing, since all policies will be viewable to all companies from a national listing they review. Thank you and love to help. GARY LANE, garylane@cox.net, 714 422 9616.
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Timing is also a factor. Some risks are temporary while others are permanent. For example, a mortgage or college education for your children have an expiration date while your income or living expenses do not. For many of my clients, we will buy term insurance to cover the temporary risks and permanent insurance to cover the permanent risks.
Insurance companies, for the most part, aren't concerned with how many different policies you have, they're concerned about the total amount of coverage you have among all the policies. If money was not an issue I would recommend all permanent insurance as it's the least expensive in the long run. However, many people cannot afford to do this and end up purchasing both permanent and term insurance as their budget allows. The most important thing is to purchase the right amount first, even if it's all term insurance. Once you lock in your insurability you can always convert that term to permanent as your budget allows.
As always, find an advisor you can trust and listen to their advice. We deal with this every day and have specialists at our home offices for more complicated issues. We can usually find the right coverage at a price you can afford.
You must be financially qualified for the sum of life insurance that you own, or for which you are insured. That is why life insurance applications will ask if you have other policies, and if you are replacing any of them. The amount for which you are financially qualified is based on your age, income, assets, and in rare situations, health factors.
I would also like to point out that most Life Insurance policies have what is called a "policy fee" that is attached to the premium of the policy. What this means is that the company is charging fifty to sixty dollars per year for the administration of that policy and there is no coverage on that amount of the premium. I have had people want several smaller policies to avoid taking a medical. This also can be a mistake since most companies have discounts on the larger amounts of Life Insurance on an individual.
In today's life you can find an individual who has knowledge in all fields of finance. If that person is living up to the pledges made to become an agent they will educate the client and help them purchase the proper Life Insurance and investments without sales pressure. A good agent builds clients for a lifetime! Allen D. "Al" Mitchell, Ph.D., CLU, FLMI Author "The Prophets Dollar" second edition.