There are many times in life when it makes sense to have more than one life insurance policy. Here are a few.
It is not uncommon for a grandparent or other family member to take out a whole life insurance policy for a child when they are young. Although the amount may be just enough to pay for a funeral, it is unlikely to be enough to meet your financial obligations as an adult. You should be expected to compare life insurance companies and policies to find if one is a better fit for your needs beyond childhood.
Circumstances have changed
Let’s say you made $30,000 a year when you bought your first insurance policy. Later, as you progress in your career, your income increases. Now, instead of earning $30,000 a year, you earn $90,000, and as your income increases, you find yourself with more financial obligations. Or maybe you started a business or had children since buying your first life insurance policy. The policy that met your needs when you first purchased life insurance may no longer be suitable for your growing needs.
Just as you would revisit a health plan or auto insurance policy as your circumstances change, it’s natural to perform life insurance checkups. If this review leads to the purchase of additional coverage, you can rest easy knowing that you are in control of the amount you leave behind.
Dependent with special needs
If you have a child who may still need assistance and want to ensure that they are cared for after your death, a single policy may not provide a large enough death benefit to cover their expenses. Buying a secondary plan (or even a third or fourth policy) makes sense when long-term care for someone you love is likely to be expensive. With so many different types of life insurance, a good insurance agent can guide you through your options.
Remember a charity
If on your way to adulthood you have become passionate about a specific cause, purchasing another policy is one way to ensure that there is money available to donate after your death.
Let’s say you bought a cheap term insurance policy when you were young and just starting out, and one with a higher death benefit when your kids were growing up. Once the kids were out of the house, you started thinking about what important causes you would like to support without taking anything away from your beneficiaries.
If you can afford a new policy, life insurance is a good way to share the wealth.