Can a person hold life insurances policies with different companies?

Answer 1

Keep in mind that you may wish to keep the eggs in one basket as it WILL save you money. There is something called "Banding" which basically means that the more death benefit you have in one policy the lower the cost per thousand. In addition, each policy has an annual policy fee of $50 or so. So in the following example you would lose out big time in the cost/$1000 but would also pay in excess of $500 annually in policy fees spread over the 10 policies. Your best bet when working with any insurance program, find and work with a reputable broker! ___________________________________________________________________ Yes, you can hold as many life insurance policies you want, and spread your eggs in many baskets. There is a concern that your applications could be rejected if you risk being "overinsured". That means the Underwriter reviewing your application will look at your net worth and other info, and determine a maxiumum dollar amount that they will offer. It has to make sense because nobody wants somebody worth more dead than alive. A company called the MIB is a clearinghouse that allows all insurance companies to see any previous activity, sort of like a credit report on your insurance applications. Say you qualify for $1,000,000 of insurance, you could get $100,000 at ten different companies (or however you want to split it up). Each company can determine the maximum they think you should have, it's not a perfect science. It can also raise red flags to insurance companies if they see you are applying all over the place. Be ready to explain why. They might worry that you either have an unscrupulous agent churning or twisting your policies, or that you have a terminal health problem. If you are wary of a company you might have insurance with already, you can take your business to another company. (Let the new agent help you with the transfer paperwork...don't go cashing in your policy on your own, if you plan to take another policy out somewhere else! There's something called a 1035 exchange that keeps you from experiencing a tax consequence, like you would if you removed the money from your retirement plan early.)