Traditionally, individuals purchase one life insurance policy to handle all their needs, but for some people, an additional policy may be necessary. Although you might not have been aware of this fact, you are allowed to have more than one life insurance policy. If you think you might benefit from this practice, or you just want to find out when it is helpful, continue reading.
Supplemental Insurance Protection
If you are currently working on a job that offers benefits, you are probably offered supplemental life insurance coverage by your employer. Often, these policies are either free of charge or have a very small premium. However, one thing is for certain—they do not last forever.
Upon your termination or resignation from your role, your access to this policy is often ended immediately. If you are older, and you leave or get released from your job, it may be difficult and costly to find a comparable policy. Adding another policy while your rates are still lower is a good way to protect yourself.
It might also make sense to add a secondary life insurance policy when you experience a major life change. Take a married couple that has acquired several rental properties in recent years, for example. At the time they secured the policy, if they did not have these additional obligations, they may have purchased lower-value policies.
However, now that their financial obligations are higher, they need more coverage. In this scenario, it is sometimes more cost effective to purchase two smaller-value policies than it is to purchase a single high-value life insurance policy. If you experience a life change that alters your financial needs, it is always a good idea to consider additional coverage.
Long-Term Care Coverage
As more people are beginning to live longer, the need for long-term care is also increasing. Long-term care, such as at a skilled nursing facility, can be costly to cover. To help mitigate this cost, certain life insurance policies can help. These policies have a withdrawal option that will allow you to draw funds from the policy's value to cover the cost of this care.
Having one of these policies separate from your regular policy means that you have access to funds for long-term care, while still leaving your family a separate life insurance policy to cover any additional expenses they might incur upon your passing.
Contact a professional for more information about life insurance.