Fidelity Life: Should policyholders buy permanent and term life insurance?

CHICAGOJanuary 20, 2022 – (

Some people seek term life insurance for its simplicity and low cost. Others are looking for permanent insurance to provide lifetime coverage for their loved ones, even if it costs more. But a policyholder can have both term and permanent life insurance policies at the same time – and in some circumstances it may make sense to get both. Read on to find out if there’s a limit to the number of life insurance policies people can hold and when policyholders should consider buying term and permanent life insurance.

Is there a limit to the number of life insurance policies one can take out?

There is no legal limit to the number of life insurance policies a person can hold. Life insurance companies may not care how many plans a policyholder has, but they do care about the policyholder’s total benefits across all policies. So, before taking out any other life insurance policy, a policyholder should make sure that he can financially benefit from the additional benefits. An insured person’s coverage limit may depend on their age, income and insurer. For example, an insured aged 50 to 60 may be limited to coverage of 10 to 15 times their annual income, while someone under the age of 40 may be eligible for coverage of up to 20 or 30 times his income.

When is it a good idea to buy permanent and term life insurance?


Both permanent and term policyholders will pay more in total premiums, but having both types of life insurance may be worth the cost for people in the following situations:

The policyholder needs more coverage

An insured may simply need more coverage over a specific period. For example, a policyholder may obtain permanent life insurance to protect their spouse, but then the couple has a child. To provide additional coverage for the family, the policyholder may want to purchase a 20 or 30 year term policy in case they die before their child becomes an independent adult.

Additional permanent coverage may be too expensive

Premiums for permanent life insurance can be much higher than the payments that come with term policies, so policyholders who need additional coverage may not be able to afford two permanent policies. Instead, they can supplement their permanent policy with term life insurance to get the coverage they need at a more affordable rate.

The policyholder has an advanced long-term financial plan

Permanent life insurance policies come with a cash value account into which a portion of each premium is paid. This cash value account can grow tax-deferred, allowing the policyholder to build wealth. If a policyholder with term life insurance is maximizing their retirement accounts, getting a permanent life insurance policy may be a smart choice to invest more of their money and let it grow.

The bottom line

Both permanent and term policies have their own advantages, but in some cases policyholders should consider obtaining both. Whether a policyholder needs additional coverage due to a major life event, can’t afford two permanent policies to get the coverage they need, or have a plan advanced long-term financier, having both policies may be the best option for his needs. Policyholders should do thorough research and consult with a financial advisor or life insurance agent if they need help deciding whether to purchase an additional life insurance policy.

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