What You Need To Know About Having More Than One Funeral Insurance Policy
It’s perfectly legal to own more than one burial insurance policy from the same or different companies. However, keep the following in mind:
- Every product has a coverage limit: Each company sets a maximum coverage amount for each product, which applies to the person. For example, if you currently have $30,000 of Mutual of Omaha burial insurance, they will only allow you to buy an additional $20,000, since the maximum on that product is $50,000.
- Companies generally don’t limit how many policies you can have so long as it does not exceed the maximum: While it’s rare (and would be rather unorthodox), you can have essentially as many policies as you want up to the point where you reach the maximum amount of coverage for that product. For example, if a company has a maximum of $30,000, you could have three $10,000 policies or five $6,000 policies. Either way, you can have any number of policies, so long as the total coverage does not exceed the product’s maximum coverage per person.
- Another person cannot buy a policy on you if it will exceed the product’s total coverage limit. Death benefit limits apply to each person. That means if you already have the maximum coverage for a product, no one else can buy any more coverage (from the same company), since you’ve reached the maximum allowed for a single person.
It’s Best To Have One Big Final Expense Policy Rather Than Multiple
Unless you can’t avoid it (which sometimes happens), the ideal scenario is to have one large final expense policy rather than multiple.
First, it’s cheaper to have a larger coverage amount than to split it across multiple policies.
Here is an example to illustrate this. We will use a 75-year-old female who does not use tobacco. Below are monthly quotes for this hypothetical woman totaling $30,000 in coverage for Aetna’s final expense insurance policy.
- Single $30,000 policy: $220.59.
- Two $15,000 policies: Each policy costs $112.04, for a total of $224.08.
- Three $10,000 policies: Each policy costs $75.86, for a total of $227.58.
As you can see, it’s less expensive to have a single policy.
Second, it’s far easier to manage one policy. This could entail updating your beneficiaries, bank account information, among other service matters.
Finally, it’s much easier for beneficiaries to file a death claim when there is only one policy.
Now, sometimes you simply cannot avoid having multiple burial insurance policies. For example, life insurance companies will not allow you to increase the coverage on an existing policy. If they allowed that, everyone diagnosed with cancer would call and increase their coverage.
To increase the amount of coverage you have, your only option is to buy an additional policy.
For example, if you currently have a $10,000 burial policy and want a total of $25,000 in coverage, your only choice is to buy a new $15,000 policy.
Don’t be lured into canceling an existing policy to buy a new large policy
If you are buying a second policy to increase your total coverage, never cancel your current policy just to have one large new policy.
The first policy you bought was priced based on your age at the time. When you buy a policy today, it’s priced based on your current age. If you were to cancel the first policy and opt for a new, larger one today, you would pay more in total.
Here is an example to illustrate this. Let’s say a 65-year-old male bought a $20,000 Transamerica final expense policy when he was 61. His premium for that policy would be $88.41. Now he wants to have a total coverage amount of $40,000.
Here’s a breakdown comparing buying a new $40,000 policy at his current age versus keeping the existing policy and adding a new $20,000 policy.
- The current $20K policy costs $88.41. The new $20K policy will cost $104.34. The total cost for the $40K would be $192.75.
- A new $40K policy will cost $205.06.
Beyond the higher cost, the other critical consideration is waiting periods.
If you have an existing policy with a waiting period, you’re either fully out of it or partially out of it. If you were to cancel that policy and buy a new one with a waiting period, you’d restart the waiting period. That would be a terrible idea.
Never, ever cancel a policy outside the waiting period for any reason (unless you don’t need the insurance at all).
While Improbable, It’s Possible That Having Too Many Final Expense Insurance Policies Could Become An Issue
It’s unlikely, but there is a scenario where a burial insurance company could push back if you have too many policies.
It would only happen if you had an obscenely high amount of final expense insurance in the range of $150,000 or more.
The issue would be: final expenses never cost this much ($150K+), so what is the reason for wanting more coverage?
It’s not a guarantee that a company would push back, but it’s possible. If so, you would just need to explain why you need such a large amount of coverage to cover end-of-life costs.
Frequently Asked Questions
Any new policy issued (from any company) cannot and will not affect your current coverage. They both operate independently of one another in every respect.
There are two reasons why all life insurance applications have questions about your existing coverage. First, the insurer is required by law to ask if you have any existing life insurance. Furthermore, they must also ask if your intention is to replace any existing coverage with the policy you’re now applying for. Beyond the legal requirement, insurers ask about other policies to determine whether your current coverage, plus what you’re applying for, will result in a total coverage amount that falls within their guidelines. Most people are not aware that life insurance companies have limits on how much life insurance they will allow a person to have. In most cases, these limits kick in around 3-5 million in coverage.
Life insurance companies will not allow you to increase the death benefit of an existing policy. Rather, you must buy a new policy for any additional coverage you may want. They don’t allow someone to increase their existing coverage because of the risk of loss. If that were possible, everyone diagnosed with a terminal illness would increase their coverage and soon after cause a catastrophic financial loss for the insurer.
- Nationally licensed life insurance agent with over 16 years of experience.
- Personal annual production that puts him in the top .001% out of all life insurance agents in the nation.
Anthony Martin is a nationally licensed insurance expert with over 16 years of experience and has personally served over 10,000 clients with their life insurance needs. He frequently authors entrepreneurial and life insurance content for Forbes, Inc.com, Newsweek, Kiplinger, and Entreprenuer.com. Anthony has been consulted as an expert life insurance source for dozens of high-profile websites such as Forbes, Bankrate, Reuters, Fox Business, CNBC, Investopedia, Insurance.com, Yahoo Finance, and many more.
- Nationally licensed life insurance agent with over 20 years of experience
- Best selling Amazon author.
Jeff Root is a nationally licensed life insurance expert with over 20 years of experience. He has personally helped over 3000 clients with their life insurance needs. Jeff is a best-selling Amazon author and the managing partner of a highly successful insurance brokerage that manages over 2,500 licensed insurance agents across the USA. He has been a featured life insurance source for prestigious websites such as Forbes, Bloomberg, MarketWatch, Nerdwallet, and many more.
- Nationally licensed life insurance agent with over 15 years of experience
- Best selling Amazon author of five insurance sales books.
David Duford is a nationally licensed insurance expert with over 15 years of experience. He has personally helped more than 1,500 clients buy life insurance. David has been featured as an expert source for highly authoritative publications such as A.M. Best and Insurancenewsnet. He also runs one of the largest YouTube channels to help aspiring insurance agents serve their clients better.
- Nationally licensed life insurance agent with over 20 years of experience
- Best selling Amazon author.
Jeff Root is a nationally licensed life insurance expert with over 20 years of experience. He has personally helped over 3000 clients with their life insurance needs. Jeff is a best-selling Amazon author and the managing partner of a highly successful insurance brokerage that manages over 2,500 licensed insurance agents across the USA. He has been a featured life insurance source for prestigious websites such as Forbes, Bloomberg, MarketWatch, Nerdwallet, and many more.
- Nationally licensed life insurance agent with over 15 years of experience
- Best selling Amazon author of five insurance sales books.
David Duford is a nationally licensed insurance expert with over 15 years of experience. He has personally helped more than 1,500 clients buy life insurance. David has been featured as an expert source for highly authoritative publications such as A.M. Best and Insurancenewsnet. He also runs one of the largest YouTube channels to help aspiring insurance agents serve their clients better.
