Knowing exactly how much life insurance you need at each stage of your life can be a difficult task. Coverage needs can change over time. You may have a growing family, future college costs, a large purchase such as a home, or just want to protect future income in the event of an untimely death. The good news is you can have multiple life insurance policies. Layering life insurance allows you to address different financial issues at various times of life. Buying more than one life insurance policy is a great way to make sure your coverage is adequate and can also save money in the long run.

What is layering life insurance?

Everyone’s financial situation changes. There is no exact rule or formula stating how much life insurance a person needs. Layering your life insurance allows you to adjust your needs over time. You can accomplish this by purchasing multiple term policies with differing expiration dates. You may save on life insurance premiums by going with multiple term life insurance policies of varied lengths rather than buying one sizable 20 or 30-year term policy. In the case of a mortgage, the balance owed will always be covered by a combination of one or two life insurance policies. And as your payout needs change in the future, you are adjusting your coverage needs. And you are doing it by not paying for coverage long after your need for it is gone. Which saves money over time.

What are some examples of debts or financial needs that can fluctuate?

-Mortgage payments

-Child care

-Current education costs

-Future education costs

-Income for surviving spouse

-Final expenses

Is layering life insurance right for me?

Each person’s financial situation is different. Layering life insurance is an option to make sure you’re spending the least amount of money to fully insure yourself in the present and future. There are also other options that may be a fit. Such as whole life, long term life policy or even a split of whole life and term life insurance. There is no perfect formula. The main takeaway is you do not have to be set on one type of policy. And there are plenty of options that will allow you to tailor your needs and do so in a way that is cost effective. 

As always it is important to sit down with a licensed insurance professional to look at all your options before making an educated decision.