There is no limit when it comes to taking out life policies but there is a lot to take into account
What is a life policy?
Before explaining the options when contracting several life policies at the same time, it is necessary to clarify what a life policy is , in what circumstances it protects us and in what way.
When contracting life insurance, the policyholder insures a certain capital (the average is usually $ 25,000) that will be delivered – in the event of his death or a disability or incapacity that prevents him from working – to those who are designated as beneficiaries in the policy, or, in the event that no specific indications are expressed, to the legal heirs; this is normally, by order, to the spouse, children or parents of the policyholder. The amount of the premium is proportional to the insured capital: the higher the capital, the higher the premium.
The key figure is the beneficiary (or beneficiaries) of the policy. If there are no express beneficiaries, the law establishes that their spouse and children (and ultimately, their parents) are, but the insured can also designate a beneficiary who is not a relative.
In this sense, it should be clarified that it is the last will of the insured that counts: you can contract a life policy without express beneficiaries and then express your wish that a single beneficiary receive the benefit or that it be distributed in a certain way in your will , or modify the beneficiaries in the policy , notifying the company in writing.
What types of life policies can I find?
Although we talk all the time about “life insurance” in a general way, there are different types of life policy. It is not the same to take out death insurance as survival insurance (also called risk and savings insurance, respectively). The main difference is the time of validity.
It is not the same to take out death insurance as survival insurance (also called risk and savings insurance, respectively). The main difference is the time of validity.
Death insurance is contingent on the insured dying before the expiration of the policy. For this circumstance it is also called term life insurance. It is renewable from year to year and guarantees the protection of the insured’s family in the event of sudden death. Only in that case will the beneficiaries or legal heirs receive the compensation. If the policy expires and the insured has not died, it is canceled or renewed.
Another option is to take out whole life insurance , with which the company commits itself to the insured for life; In other words, a capital is secured to be received at the time of the insured’s death, regardless of when it occurs, with no expiration date.
The survival raises the opposite possibility: that the insured survives the date of maturity of the policy. In that case, the beneficiaries will receive the benefit in concept of the insured capital. Thus, this insurance is considered as an investment and as an extra guarantee of peace of mind to face retirement.
There are also policies that combine both options, called mixed insurance . And there are even those that allow you to ensure capital in the event of death due to specific diseases , such as cancer, or different degrees of disability . In any case, it is a question of being able to face a possible loss of income in the family with the support of the insured capital.
Can you have more than one life insurance policy?
Nothing prevents someone from taking out several life insurance policies at the same time and benefiting from the advantages that this would entail, both for the insured and for their family. Even for your income statement.
On the one hand, the option of combining policies makes it possible to designate different beneficiaries or distribute the assets as the insured wants, in case of having a large estate or if you want to include someone who is not a legal heir. Thus, in each policy the insured can decide what amount to leave to each person.
By contracting several life insurance policies, the insured can guarantee the protection of his family in different circumstances : for example, having coverage in the event of sudden death (term life insurance) or ensuring capital for his family at the time of his death. or in the event of incapacity for work, without an expiration date that conditions the collection of the policy. You can even take out a life policy that guarantees a capital available in the event of serious illness, to be able to cope with the loss of income during treatment or its expenses.
There is also the possibility of taking out life insurance to guarantee the payment of the mortgage , in the event that the insured dies before complying with all the payment letters. In this case, the compensation offered by the company may correspond to the capital pending liquidation.
If they decide to contract with the same company, there could also be a financial benefit, in the form of discounts on the premium.
Also Read :All about single premium life insurance
Is there a limit?
In principle, No . Each person can take out as many life policies as they want or can afford, depending on their needs and according to what circumstances they want to be protected. In any case, if several premiums are to be assumed per year, it is more necessary than ever to compare offers and coverage and choose once the advantages offered by each company are well known in the event of subscribing several policies with them.
You are interested in knowing if you can get a discount or what tax advantages the different life insurance policies that exist in the market offer you.
Nothing prevents someone from contracting several life insurance policies at the same time and benefiting from the advantages that this would entail, both for the insured and for their family
It is highly recommended, in addition, to inform the family of the existence of all the policies , in the case of having several. According to the economic publication IG, it is estimated that 10% of the policies are not charged because nobody claims them; In other words, the family did not know that the insured had life insurance and that they were entitled to a benefit.
Equally important is to record the last will, either by designating specific beneficiaries for each policy or by doing so in a will . In this sense, a notarized open will is the option with the most guarantees: it is not lost, there is no possibility that it will be declared null or that conflicts are generated because the will of the deceased is not clear. In addition, with a notary, the family of the deceased will receive legal advice on the procedures to be carried out, essential for the collection of the policy, such as the liquidation of inheritance tax.