You can have as many as you want or can afford as long as the total amount of inurance is deemed reasonable by the issueing companies. A single person making $15,000 a year may have a heard time convincing the insurance company he has a need or can afford $10,000,000 in life insurance. Otherwise there are no rules governing how many policies you can have
Co-Founder, Coastal Financial Partners Group, California
There is no limit on the number of policies that one may have on one's life. However, there is a limit on the total amount of coverage (death benefit) on one's life. Depending on insurer, for insureds under 40 it can be up to 25 times one's earned income. The multiple is less at older ages.
Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona
You can have several life insurance polices, but it's the collective amount of total death benefit that ultimately hits a threshold of financial justification. You're only worth so much and when that threshold is met, you're ability to purchase additional life insurance is generally limited. Keep in mind that you also have to establish insurable interest between the policy insured and the policy beneficiaries.
There is no limit on how many life insurance policies someone can have, as long as the sum of all the face amounts is within what can be justified financially. When you apply for a new policy, the insurance company will ask what existing coverage you have, as well as if you plan to replace any of your current policies. That is partly so they can determine your sum total of life insurance. On average, most people can get about 20 times their annual income in life insurance, but it can be far more or far less depending on age, net worth, and other factors.
President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
I am working on a case right now in which my client has applied for 11 policies. Here is the breakdown:
He is a partner in one business with two other fellows. They have just completed a buy-sell agreement and are funding the agreement with life insurance. Per the advice of their accountant and their attorney, they are purchasing several policies to cover both the current and the anticipated future value of the business. One policy will be owned by the business, and four other policies will be owned by a trust.
That gives us five policies so far.
My client is also a partner in a second business, with another fellow. They are following the same funding strategy. That business will own one policy, and the trust will own an additional four.
Our count is now up to 10 policies.
But these policies take care only of business needs. My client is also married with children. He needs life insurance for family protection. So he is purchasing yet another policy for their benefit.
That gives us 11.
The underwriter is fine with this set up. My client can justify the need for all policies financially. All policies have been deemed appropriate with regard to the financial needs of the business and the financial needs of his family.
And you know what? He could buy more if he wanted to.
Let’s suppose he supported a number of charities. They could be religious, or social service, or political. He could take out a separate policy for each of their benefit. Five charities, five more policies.
But we have another consideration. What if his net worth is over $5 million, and he wants to preserve his estate for his heirs? What if he wants to avoid forcing his family to liquidate his assets just to pay Uncle Sam’s estate tax bill?
He could buy life insurance to cover the tax bill. Another policy.
We are not done yet :). What if his parents were financially dependent on him. It happens. What if his premature demise would put them in financial straits? He could buy life insurance on himself for their benefit, so they could be well taken care of.
Do you realize that in this scenario, this one client could take out 20 or so policies?
And it would all be financially justified and appropriate.
How do you like that?
Would you like to keep learning? Read my blog: planrisklive.com
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He is a partner in one business with two other fellows. They have just completed a buy-sell agreement and are funding the agreement with life insurance. Per the advice of their accountant and their attorney, they are purchasing several policies to cover both the current and the anticipated future value of the business. One policy will be owned by the business, and four other policies will be owned by a trust.
That gives us five policies so far.
My client is also a partner in a second business, with another fellow. They are following the same funding strategy. That business will own one policy, and the trust will own an additional four.
Our count is now up to 10 policies.
But these policies take care only of business needs. My client is also married with children. He needs life insurance for family protection. So he is purchasing yet another policy for their benefit.
That gives us 11.
The underwriter is fine with this set up. My client can justify the need for all policies financially. All policies have been deemed appropriate with regard to the financial needs of the business and the financial needs of his family.
And you know what? He could buy more if he wanted to.
Let’s suppose he supported a number of charities. They could be religious, or social service, or political. He could take out a separate policy for each of their benefit. Five charities, five more policies.
But we have another consideration. What if his net worth is over $5 million, and he wants to preserve his estate for his heirs? What if he wants to avoid forcing his family to liquidate his assets just to pay Uncle Sam’s estate tax bill?
He could buy life insurance to cover the tax bill. Another policy.
We are not done yet :). What if his parents were financially dependent on him. It happens. What if his premature demise would put them in financial straits? He could buy life insurance on himself for their benefit, so they could be well taken care of.
Do you realize that in this scenario, this one client could take out 20 or so policies?
And it would all be financially justified and appropriate.
How do you like that?
Would you like to keep learning? Read my blog: planrisklive.com