In the case of life insurance policies, less is never more. Having multiple life insurance policies may seem like a plan utilized only for the extremely rich, but nobody should count themselves out. Getting told we should have more of something and taking care of the responsibility can make us feel as though we’re being forced to sit through a bad sales pitch, but keeping an open mind could make a difference.
Get What You Need from Insurance
People infrequently find ways around needing life insurance, which explains why over 60 percent of Americans contribute to the $4.3 trillion that the life insurance industry is worth. As most know, the purpose of life insurance is to compensate for a person’s lost income in the event of their death.
What that phrase fails to emphasize are the many ways that life insurance can help secure the lives of families when a family member is lost. Life insurance payouts can be used to pay off a mortgage, put students through college, cover costly funeral expenses, pay off debt, and even help preserve a legacy by giving a charitable donation.
In a nutshell, if you’re thinking of your loved ones, you know you need life insurance, but how much life insurance you can get will heavily depend on your health and financial status.
Going to the Doctor is Important
To qualify for any coverage or extend your current range of coverage, life insurance providers need to gauge and verify your current medical records. Not to be grim, but a potential policyholder’s life expectancy helps life insurance providers in setting monthly premiums and serves as financial security from insuring too many high-risk members for the company.
Life insurance providers will also increase premiums based on hobbies and habits that directly or indirectly impact your health. Hobbies such as rock climbing, surfing, and scuba diving, along with any habits like smoking, increase your risk of severe illness, or chances of being in a fatal accident and will subject you to higher premium rates.
Where Income Matters
Secondly, the need for income and asset verification is mainly used as a way for life insurance providers to insure themselves against over payouts. An over payout would mean that in the event of an insured’s death, the company is, or would be, held responsible for providing more funds than the assets owned by the insured.
So whether or not you may feel great about your investment with Bitcoin, insurance companies will gauge your premium on your assets and income. However, the need to protect against over payouts doesn’t disqualify any potential members from being approved for multiple kinds of policies.
Reasons to Have More than One Policy
When looking for any kind of insurance, it’s hard not to see past the dollar signs and what could potentially cut into our weekly Starbucks or leisurely pleasures budget, but in the case of life insurance, spending less doesn’t equal cheaper.
The tricky part about life insurance is that it’s hard to think about dying, and most of us don’t exactly plan on it.
Having a standard and affordable life insurance policy is a solid plan, but many households miss out on the opportunities and coverage that additional plans provide. For more coverage that is affordable, two policies can offer greater flexibility, lifestyle benefits, and temporary coverage.
More Kinds of Insurance Mean More Coverage
Term life insurance is a common plan because it typically is the least costly. What a term policy provides is a guaranteed payout to the family or any chosen beneficiaries of the deceased if the policyholder’s death occurs within the specified policy terms.
Term life insurance does not offer savings or investment options making it strictly insurance in case of death. A cash-out from a term policy is typically not available but is something to seriously consider if a temporary life change like a job transfer, vacation, deployment, or abroad study is in your future.
Universal life insurance has monthly premium payments that will go toward both the payout amount of a death claim and the policy’s amount of cash value.
This kind of policy is a great one to have in addition to any existing policies you may have because once the cash value of your policy reaches a certain amount, you can use the accumulated interest to pay off your monthly premium, making your insurance essentially pay for itself.
Variable life insurance is great for starting or adding to your investment portfolio. I won’t pretend to understand stocks, because lets be honest, who does? But the sub-accounts your money goes into will function in a similar fashion.
Adding a variable policy to your insurance is an excellent option. Suppose you want to make any changes in your future where you know you’ll need financial backing, like buying a home or starting a business. In that case, a variable life insurance policy is a great non-time consuming side hustle to get you closer to goals or solely increase your savings.
Protect Your Assets
Don’t let a stereotypical murder mystery plot account for your only impression of getting non-family members insured. If your livelihood or financial responsibilities are in any way connected to another individual such as a business partner or dependent, creating another life insurance policy for them is, well, a smart choice.
Choose a life insurance plan that is fitting to your connection with that person and discuss with them what each of you thinks is fair in the event of one of your deaths. Splitting of assets can be messy and tarnish lifelong connections, so planning your life insurance to protect against financial losses from business partnerships, investments, or financial dependents can help keep the peace once someone is gone.
Life Insurance 2.0
Whether you decide if a short- or long-term additional policy is the right fit for you, the benefits of having two or more life insurance policies not only secure your legacy but can be supplemental to the life you live now.
If you’ve been quoted for high premium rates in the past, talking to life insurance providers about obtaining the same or an increased amount of coverage can turn the financial burden of needing life insurance into a pillar of financial stability.
Danielle Beck-Hunter writes and researches for the life insurance site, QuickQuote.com. She is an insurance expert and strives to make insurance information clear, entertaining, and more accessible.
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