When it comes to securing the future finances of your loved ones, Term Life Insurance remains one of the most popular forms for many Canadians. Inexpensive, uncomplicated, and providing a range of peace of mind in regard to the safety of one’s family should something befall them-it makes complete sense. However, what if you require more than one policy’s worth of coverage? Can you take out more than one Term Life Insurance Policy in Canada? The answer in its simplest form is yes, but with a great deal more to consider before you decide to go down this path.
Why Multiple Policies Might Be Necessary
Imagine you had reached that phase of your life when your financial liabilities had increased:
- You have just purchased a new house.
- You are paying to educate your children.
- You happen to be the only breadwinner in your family.
You already have a Term Life Insurance Policy in place, but you increasingly feel that the amount of coverage may be inadequate. This is quite a common scenario most Canadians find themselves in. They often ask whether they can have more than one term life policy to cover all of their needs.
While that sounds like a pretty convoluted concept, the idea of multiple policies isn’t exactly as complicated as it sounds. It’s essential to understand what potential implications, benefits, and possible drawbacks come with having more than one Term Life Insurance Policy. In the blog below, we will go into detail so you may make an informed decision on whether carrying multiple policies is right for you.
Understanding Term Life Insurance
Before we get into the concept of having multiple policies, let’s first have a quick review of what Term Life Insurance is. Term Life Insurance covers you for a period of time- the “term.” If you die within that term, your beneficiaries will receive a death benefit. If the term ends and you are still living, then the policy expires, and there is no payout.
It is one of the most affordable and simple forms of life insurance. Generally speaking, term life premiums are lower than permanent life insurance premiums, which helps individuals or families get protection without having to spend lots of money.
Can You Legally Have Multiple Term Life Insurance Policies in Canada?
The short answer is yes: you can have Multiple Term Life Insurance Policies in Canada. In fact, there’s no law in the books that forbids you from doing so. In fact, it’s quite common for people to own more than one policy in order to meet their financial needs.
You may have Term Life Insurance from work but want to add some extra coverage by purchasing another policy. Or maybe you purchased a policy when you were single, but now, having become married with kids, you have more reasons to get higher coverage. In these cases, holding multiple policies might be practical.
Reasons to Consider Multiple Term Life Insurance Policies
There are several reasons why someone might consider having Multiple Term Life Insurance Policies:
- Increased coverage needs: Because one’s life circumstances are ever-changing, so is the need for insurance. For instance, one may buy a new home or have more children, increasing the need for more coverage.
This involves staggered terms, some for covering mortgages over 25 years, others for income replacement until children become economically independent. Possessing different policies with staggered terms makes it ideal for matching various types of financial goals in line with the coverage.
- Affordability: You might actually find buying a couple of smaller policies more affordable than trying to buy one large policy. This will be one effective way of keeping the costs down while still securing the necessary coverage.
- Employer insurance: You may want to take an additional personal policy since you get Term Life Insurance from your employer once you change employers or if your employer-provided coverage isn’t sufficient.
- Diversification: You could also diversify your coverage by buying multiple policies from different insurers. That could be an important consideration if you had a particular concern about the stability of any one company.
How to Manage Multiple Term Life Insurance Policies
While having Multiple Term Life Insurance Policies can be beneficial, it also requires careful management. Here are some tips on how to effectively manage multiple policies:
- Keep Track of Premiums: Multiple policies mean multiple premium payments. It’s crucial to keep track of when each premium is due to avoid lapses in coverage. Setting up automatic payments can help ensure you never miss a payment.
- Review Your Coverage Regularly: As your life circumstances change, so do your insurance needs. Regularly reviewing your policies can help ensure that you’re neither over-insured nor under-insured. It’s also an opportunity to adjust your coverage as needed.
- Work with a Trusted Insurance Broker: An educated Term Life Insurance Broker can help someone wade through the complexities associated with several different policies. They will be able to help you find the best Term Life Insurance Quotes, comprehend the policy terms and conditions, and make sure your coverage fits your financial goals.
Potential Drawbacks of Multiple Policies
While there are benefits to holding Multiple Term Life Insurance Policies, there are also potential drawbacks to consider:
- Complexity: Managing multiple policies can be complex, especially if they have different terms, premiums, and renewal dates. This complexity can make it challenging to keep track of all your coverage details.
- Cost: While having multiple policies can provide flexibility, it can also increase your overall insurance costs. You’ll need to weigh the benefits of additional coverage against the cost of multiple premiums.
- Insurability: Insurance companies will assess your insurability for each policy you apply for. If your health has changed since you took out your first policy, you might face higher premiums or even be denied coverage for additional policies.
- Over-Insurance: It’s possible to be over-insured, meaning you’re paying for more coverage than you actually need. Over-insurance can lead to unnecessary costs without providing additional benefits.
How to Get Term Life Insurance Quotes for Multiple Policies
Since you will be applying for more than one term life policy, it is very important that you shop around and compare quotes. In that sense, this is somewhat similar to buying a single policy: you will be doing this for each and every policy you will consider.
- Determine Your Coverage Needs: Start by assessing how much coverage you need. Consider your financial obligations, such as your mortgage, income replacement, and future expenses like your children’s education.
- Use Online Tools: Many insurance companies offer online tools that allow you to get Term Life Insurance Quotes quickly and easily. This can give you a ballpark figure of what your premiums might be for different coverage amounts and terms.
- Consult a Broker: Working with a Term Life Insurance Broker can be particularly helpful when you’re considering multiple policies. Brokers have access to a wide range of insurance products and can help you compare options from different insurers.
- Evaluate the Policies: Once you have your quotes, evaluate the policies based on coverage, premiums, and the insurer’s reputation. Look for policies that offer the best balance between cost and coverage.
Case Study
Consider a scenario in which Multiple Term Life Insurance Policies made sense. The father of two, age 45, had taken out a 20-year Term Life Insurance Policy when his first child was born. With the children growing older and a new mortgage on a larger home, he realized his current policy may not be enough.
Based on the needs analysis, he decided to add a 15-year term policy that would be dedicated to the mortgage, besides adding some income replacement until the kids were financially independent. That gave him, in any case, the feeling of security that both policies together would provide were he not around to at least take care of his family.
Conclusion: Is Multiple Term Life Insurance Right for You?
In the end, yes, you can have Multiple Term Life Insurance Policies in Canada, and more often than not, it’s a very prudent thing to do. Whether one is seeking additional protection due to life changes, desiring staggered coverage to coincide with different financial goals, or simply finding comfort in the security of extra protection, multiple policies offer flexibility and security for what you are seeking.
However, this decision should be made with due care. Your financial goals, coverage needs, and probable costs versus benefits all have to be considered. A Term Life Insurance Broker will be able to help you through this complex situation and further guide you on the best decision which would suit your needs.
FAQs
Can I have Multiple Term Life Insurance Policies in Canada?
Yes, you are allowed by law to take out more than one Term Life Insurance Policy in Canada. That can be helpful in meeting diverse needs and different financial goals.
How do you manage Multiple Term Life Insurance Policies?
You need to monitor the premium payments and review coverage on a regular basis, and you might like to seek the help of a broker in the management of Term Life Insurance for complexities.
What are the disadvantages when there are Multiple Term Life Insurance Policies?
The disadvantages could be more complex processing, greater total cost, and over-insurance.
How do I obtain quotes for Multiple Term Life Insurance Policies?
Obtain quotes using online tools to buy Term Life Insurance Online, establish your coverage requirements and engage the services of a broker to discuss several insurance providers’ offerings.
What are the advantages of having Multiple Term Life Insurance Policies?
Advantages include:
- The ability to ladder policies to achieve your financial objectives.
- Flexibility regarding your changing insurance needs.
With the factors discussed in this blog, now it’s time to make an informed decision about whether Multiple Term Life Insurance Policies are, in fact, right for you and your family.
