Can You Have More Than One Life Insurance Policy?
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Whether you’re stacking term life insurance coverage to match changing financial needs or combining group and personal policies, holding more than one life insurance policy can make sense for some people. But more coverage isn’t always better, each policy should serve a clear purpose, and you want to nail that down before you start shopping for life insurance quotes.
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Can you have more than one life insurance policy in Canada?
You can have more than one life insurance policy in Canada, and many people do. For example, you could have:
- A personal term life insurance policy and a group life insurance policy through your employer
- Two or three term life insurance policies
- A term life insurance policy and a permanent life insurance policy
While a personal term policy will last anywhere from 10 to 30 years, your group policy will only remain active while you’re employed with the company.
“Group life insurance is a nice perk, but it’s something to build on. It’s a good starting point but usually not enough for most families.” —Erik Heidebrecht, PolicyMe life insurance advisor
There is no limit to the number of life insurance policies that you can hold, but remember, more is not always better and you can't simply take out coverage on anyone. You only need enough life insurance to cover your financial obligations.
Read more: How much life insurance do you need?
Pros and cons of having more than one life insurance policy
Having more than one life insurance policy could be excessive, or it could be a wise strategy based on your financial situation. No matter which camp you ultimately fall into, it’s important to understand the benefits and drawbacks of multiple policies.
Is having multiple life insurance policies worth it?
Whether it’s worth it to have multiple life insurance policies depends on your financial situation and life insurance needs. Here are some examples to help you consider whether multiple policies might be right (or not) for you.
Scenario 1: Long-term and short-term financial obligations
The situation: You have long-term financial obligations like a mortgage or future education costs, but also some short-term needs like childcare or temporary income replacement.
How multiple policies could help: You can layer different term lengths (e.g., 10-year and 20-year terms) to ensure you’re not overpaying for coverage as your short-term financial obligations end.
Worth it? Maybe—it allows flexibility as your financial situation changes over time.
Scenario 2: Blended family
The situation: You have a blended family with dependents from different relationships.
How multiple policies could help: Having separate policies can help keep benefits clear for each dependent and ensure your loved ones are all protected.
Worth it? Maybe—it offers clarity and control over which beneficiary receives what.
Read more: Life insurance for couples
Scenario 3: Personal and business obligations
The situation: You own a business that has financial obligations, such as a business loan.
How multiple policies could help: Multiple policies can help you keep personal expenses separate from business ones, ensuring both obligations are covered.
Worth it? Probably—it allows you to protect your family and your business without mixing the two.
Scenario 4: Debt-free with no dependents
The situation: You aren’t carrying any debt and you don’t have any dependents. You may already have a small life insurance policy to cover final expenses.
How multiple policies could help: In this case, multiple policies probably wouldn’t help unless you had new obligations arise or wanted a new policy for estate planning.
Worth it? Not necessarily—with no debt or dependents, there’s rarely a need for multiple policies.
Do you need more than one life insurance policy?
To decide whether multiple life insurance policies might be worth it for you, consider these questions:
- Do you have both short-term and long-term financial responsibilities?
- Are you a business owner or do you have financial obligations outside your household?
- Is your family situation complex?
- Has your financial situation changed significantly since you bought your first policy?
- Do you want to increase your coverage but keep your original policy in place?
- Are you trying to leave money behind for different purposes or people?
Laddering multiple policies to match life’s stages
Life insurance laddering is when you purchase different policies with varying durations and coverage amounts. For example:
- A 10-year term life insurance policy for $250,000 to cover childcare and family living expenses while the children are young.
- A 20-year term policy for $400,000 to cover the mortgage balance and post-secondary education costs for the kids.
- A 30-year term policy for $150,000 to provide long-term income replacement.
Instead of paying one premium for $800,000 worth of coverage for 30 years, you pay for what you need, when you need it.
There are a few benefits to this strategy:
Single term life insurance vs. laddering
Choosing between a single term life insurance policy or laddering policies depends on your financial situation, life stage, and the amount of flexibility you require. Here’s how the two options compare.
The bottom line: Your life insurance coverage should match your financial obligations. Understanding them is the first step to ensuring you have just the right amount of coverage—no more, no less.Â
Alternatives to buying more than one life insurance policy
If you need more or different coverage, buying an additional life insurance policy isn’t your only option. Here are some other approaches to consider:
- Add riders to an existing policy. These optional add-ons will enhance your current policy, allowing you to customize your coverage without complicating things. Most life insurance providers offer critical illness, disability, and more.
- Replace your existing policy. If your coverage needs or financial goals have changed significantly since your initial life insurance purchase, cancelling your policy and securing a new one that better reflects your situation is an option.
- Choose a decreasing term policy. With this type of policy, the death benefit decreases over time to reflect decreasing financial obligations. It allows your coverage to scale down while still offering peace of mind and the simplicity of a single policy.
FAQs: Can you have more than one life insurance policy?
