I’ve written often and am a big advocate of owning more than one life insurance policy, staggering or layering term policies. The reason is simple. Unless you are the complete odd duck in the pond, your life insurance needs are not all the same length and not all for one reason.
I practice what I advocate. Until last week I had a policy that was initially purchased as income replacement, a policy that was specifically tied to a piece of commercial property, a policy that was tied to several rental properties, a policy to ensure my grand daughter’s shot at higher education, another policy that was taken out to supplement the increase in my income since the first policy and a 30 year term policy that worked into my budget nicely the last year I could buy a 30 year term.
Seems like a bit of overkill, but when you consider the different term lengths, what each policy was for, the convertibility of certain policies and the underwriting I was able to get from certain companies making it affordable, it all worked, until just recently. the new income replacement policy I took out was at a better rate class than my first one, so when I applied for it I replaced a $500,000 policy with a $1 million 20 year term policy. I no longer needed the first one or at least all of it.
I had another policy tied to the commercial property where I had my office until last week. We just recently sold that property so I really didn’t need to carry that $500,000 any longer, but it was a policy that had a tremendous conversion option to the best priced no lapse guarantee UL in the business. I converted $50,000 of that policy and, after offering the rest to my children to no avail, I lapsed it.
The offer to I made to my children is something you might want to consider as long as you are sure they love you. Essentially I would have turned over ownership of the other $450,000 of term insurance to them. They make the payments. They convert it when or if they need to and they are the beneficiaries when I die. The part they couldn’t get their head wrapped around was paying for it. If you have a child or children who are financially stable and savvy enough to do the math, it can be a great investment.
Bottom line. Staggering your term insurance policies and carrying multiple policies give you far more flexibility than carrying one policy for one term length. Worth considering.