Shawn Meaike is an insurance advisor and the CEO of Family First Life. In the following article, Mr. Meaike discusses why having multiple life policies can often pay off in the long run.
Life insurance is more than a just backup plan to protect your family in the event of an accident. It’s an essential piece of your financial strategy and something that becomes ever more important as you grow older. By purchasing multiple life insurance policies, you can structure your insurance to meet different financial goals, supplement existing whole-term policies, and reap the benefits of favorable premiums.
Don’t neglect your life insurance policy until you fear you’ll need it. By investing in a comprehensive range of coverage, you can rest assured that your family will be well taken care of. In this article, Shawn Meaike discusses the many benefits of having multiple life insurance policies and how you can stagger term and whole-life plans to protect your best interests.
Understanding the Difference Between Term and Whole-Life Policies
Before diving into the benefits of structuring your finances around multiple insurance policies, it’s important that you understand the difference between a term and a whole-life policy.
In the simplest of terms, a whole-life policy is exactly what it sounds like—a life insurance policy that covers you for your entire life. As long as you keep up with the premiums, the policy will pay out a death benefit to your beneficiaries when you die explains Shawn Meaike.
A term policy, on the other hand, only covers you for a set period of time—usually 10, 20, or 30 years. Once that term is up, you have the option to renew the policy, but your rates will be much higher than they were when you first took out the policy.
Shawn Meaike says that most people choose to have a mix of both term and whole-life policies. Term life insurance is typically much cheaper than whole life insurance, so it’s a good way to get started on building your life insurance portfolio. As you get older and your financial situation changes, you can supplement your term policy with whole-life insurance to make sure that you’re always covered says Shawn Meaike.
The Many Benefits of Having Multiple Life Insurance Policies
Now that you understand the difference between term and whole-life policies, Shawn Meaike explains the benefits of having multiple life insurance policies.
One of the biggest benefits of having multiple life insurance policies is that you can use them to meet different financial goals. For example, Shawn Meaike says that you can use one policy to cover your final expenses and another policy to provide income replacement for your family. Or you can use one policy to pay off your mortgage and another policy to fund your child’s college education.
Another benefit of having multiple life insurance policies is that you can use them to supplement existing coverage. For example, Shawn Meaike says that if you have a whole-life policy that you’ve had for many years, you may want to supplement it with a term policy to make sure that your family is fully protected.
Lastly, having multiple life insurance policies can help you qualify for favorable rates. Many insurance companies offer discounts for policyholders who have multiple policies with them. So, not only can you get the coverage you need, but you can also save money on your premiums explains Shawn Meaike.
How to Stagger Term and Whole-Life Policies
One of the best ways to take advantage of the benefits of multiple life insurance policies is to stagger your term and whole-life policies. For example, let’s say that you have a 20-year term life insurance policy with a death benefit of $500,000. You also have a whole life policy with a death benefit of $250,000.
If you die 20 years from now, your beneficiaries will receive a total of $750,000 – $500,000 from the term policy and $250,000 from the whole-life policy. But what if you die tomorrow? In that case, your beneficiaries would only receive $500,000 from the term policy because it would have expired explains Shawn Meaike.
To avoid this scenario, you can stagger your term and whole-life policies so that they don’t both expire at the same time. For example, you can have a 20-year term policy and a whole life policy with a term of 30 years. That way, if you die tomorrow, your beneficiaries will still receive $250,000 from the whole-life policy.
So, in short, staggering your term and whole-life policies is a great way to make sure that your family is always protected. It’s also a good way to take advantage of the discounted rates that many insurance companies offer for policyholders with multiple policies.
The Bottom Line
Although you may feel safe investing in a single life insurance policy, by investing in both term and whole-life plans, you can successfully cover your bases and meet a range of financial goals. Speak with a financial advisor to learn more and discuss how your family could benefit from multiple insurance policies today.