Did you know that it is perfectly legal, and sometimes advantageous, to own more than one life insurance policy? I, myself, own three. At a Missed Fortune seminar, Doug Andrew, (famous life insurance agent) claimed to own 13 life insurance policies, with millions of dollars of coverage on his life. You can own separate policies from different carriers, or even more than one policy from the same carrier.
Usually when I recommend multiple policies, the recommendation is for a combination of a permanent policy and some type of term policy. It is very common that my clients need a lot of short term coverage, ($500,000 to $2,000,000), say for 10 to 20 years while they’re still working. This should probably be a term policy, because it is the most affordable product for a short term need.
They may want to leave a small amount, say $50,000 to $100,000, to their spouse or children no matter how old they are when they die, to be used for final expenses, funeral costs, etc. Since they will probably not own the term policy when they get to their 70’s or 80’s, they should also purchase some permanent coverage while they are younger, so it costs less than waiting for the end of their term. In this case, a guaranteed universal life insurance policy will most likely be best for this person, in addition to the term policy.
In some cases, it makes sense to own two term policies. For example, Genworth Life introduced new term rates this month, with huge increases to their policies with face amounts of more than $1,000,000. For example, a 40 year old male in standard health would pay $1,710 annually for Genworth’s 20 year term policy with a face value of $1,000,001. That same man could save himself $150 per year by purchasing two 20 year term policies from Genworth Life, one for $500,000 and the other for $500,001, at a cost of $780 annually each, or $1,560.
Combining a no frills, level term policy (without any riders), with a term policy with a return of premium rider, is another way to keep your premiums low and get the additional benefit of one of your policies returning its premiums to you at the end of the term.
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