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Can you have more than one life insurance policy in Canada?
Yes, you can! In Canada, it’s perfectly legal to hold more than one life insurance policy. In fact, more Canadians have multiple policies than you might think.
For the most part, there’s no limit to how many life insurance policies you can have and how much coverage you can get. Of course, most Canadians don’t need a handful of life insurance products. But when used strategically, having more than one life insurance policy can be a valuable financial asset for you and your loved ones to supplement an existing policy, or to temporarily increase coverage in specific seasons of life.
As long as you’ve been truthful on your applications, been approved for each policy, and you’re staying on top of your premiums, having more than one policy is perfectly fine. And in some cases, it might actually be ideal.
Can you have individual and group life insurance at the same time?
Yes, and it’s very common for Canadians to hold individual and group life insurance policies at the same time.
Individual life insurance policies are ones you purchase for yourself. And group life insurance policies are purchased as part of a group, usually as part of your employee benefits plan.
The reason it’s so common to see Canadians layering individual and group life insurance policies is because group life insurance can come with limitations. For example:
- Group life insurance policies are typically tied to your employer, so if you change jobs, you’ll likely lose that coverage.
- Coverage amounts are often tied to compensation, such as 1-2x your annual salary, which is often not enough coverage for the average Canadian.
An individual or personal term life insurance policy can fill in the gaps to make sure you have the coverage amounts you need for the length of time you need it. Since it’s not tied to your job or other group policy requirements, you have the flexibility to choose the policy that best fits your unique situation.
Why do people get more than one life insurance policy?
Having more than one life insurance policy makes it easy to stack or layer coverage based on life’s evolving needs. Here are some reasons people purchase additional life insurance policies:
Adding additional coverage
The amount of life insurance you need changes based on your financial responsibilities. For example, you might want more coverage when you’re paying off your mortgage or during your child-rearing years. But you may not want those amounts permanently. Adding an additional life insurance policy for a temporary period is an easy way to make sure those needs are met—without having to adjust an existing policy.
A new policy will come with a different term length and end date. For example, consider a parent who has a 20-year term life insurance policy that ends in 10 years. Upon the birth of a new child, they may choose to purchase another 20-year term life insurance policy to extend their coverage until that child is of age.
Cost savings
A single longer and larger term life policy may offer the most affordable monthly premium, but you pay that rate for the entire length of the term—regardless of whether your coverage needs decrease over time. A more tailored strategy, called laddering, involves buying several term policies with different coverage amounts and term lengths. For example, one policy could end when your mortgage is paid off, another when your children become independent, and a smaller one for your spouse or retirement.
By laddering your policies, you can reduce your overall costs by only paying for the exact coverage you need during the times you need it. The goal is to align your insurance to your changing financial responsibilities throughout your life. That said, laddering means keeping track of several different policies with different end dates, so it’s something that requires a bit of extra care.
Is it worth having more than one life insurance policy?
Whether or not it’s worth laddering life insurance policies depends on you and your loved one’s unique circumstances. You may only need multiple policies in certain phases of your life.
Let’s look at an example of when it might make sense to purchase multiple life insurance policies.
Policy 1: $500,000 term life insurance policy for a 25-year term.
Alex is 30 years old. They just purchased their first home with a 25-year mortgage.
They purchase their first term life insurance policy, $500,000 for a 25-year term, to cover the mortgage in the event they pass away before the mortgage is paid off.
Policy 2: $300,000 term life insurance policy for a 25-year term.
Five years later, Alex is 35 years old. They just welcomed a new baby to the family.
They purchase a second term life insurance policy for $300,000 for a 25-year term, to replace any income in the event they pass away during the years their child is financially dependent on them.
Policy 3: $200,000 term life insurance policy for a 15-year term.
Another 10 years down the road, Alex is 45 years old. They own their own business, have some employees, and other financial obligations. They plan to retire in 15 years, at 60 years old.
They purchase a $200,000 term life insurance policy at a 15-year term to cover any business obligations in the event they pass away unexpectedly.
This example allows Alex to have a total of $1 million in term life insurance over 30 years. But instead of paying premiums for 30 years on a $1 million policy, they only pay the premiums for the amounts they need when they need them.
While laddering multiple policies can certainly be worth it in many cases, there can be some drawbacks. Individual premiums and rates may be higher, you’ll need to manage multiple premiums every month, and keeping track of coverage can be tricky.
If you’re not sure if having multiple policies is right for you, Blue Cross Life’s team of expert insurance advisors can help you find the best solution for you and your loved ones. Just email service@life.bluecross.ca or call +1 (866) 316-4458.
Can your beneficiaries make multiple life insurance claims?
If you have multiple life insurance policies active at the time of your passing, your beneficiaries will be able to make multiple life insurance claims. Because each life insurance product is separate, making a claim on one has no impact on the others.
Let’s look at the previous example.
If Alex were to pass away unexpectedly at 50 years old, Alex would have three policies in effect. If Alex designated their spouse as the beneficiary of all three policies, their spouse would receive three separate tax-free payouts of $500,000, $300,000, and $200,000, to a total of $1 million. On the other hand, if Alex were to pass away at 58, only the second and third policies would be active. Their spouse would only be able to make two claims in this instance.
Keep in mind that if you have multiple life insurance policies, you do not need to have the same beneficiaries listed for each policy. In the above scenario, Alex may list their spouse as the beneficiary of Policy 1, their children for Policy 2, and their estate as Policy 3.
Can you apply for term life insurance through multiple insurers?
When you purchase multiple term life insurance policies, there’s no requirement that they all have to be through the same insurance provider.
Even when you’re applying for a single policy, it’s typical and encouraged to get quotes for insurance through different providers. Every insurance company has different rates and benefits, even for the same term length and coverage amount. Getting several different quotes can help you find the best policy for you.
That said, purchasing additional policies from the same provider can simplify the process and make it easier for you to manage your policies in the future.
Find the right life insurance policies with Blue Cross Life
Whether you’re purchasing your first term life insurance policy or thinking of adding on additional coverage, Blue Cross Life has you covered. Choose from flexible 5-year term lengths from 10 to 30 years and customizable coverage amounts from $100,000 to $5 million—all at affordable rates.
Live life to the fullest knowing your loved ones are financially protected. When you purchase Blue Cross Life Term Life Insurance, you can benefit from:
- No restrictions on decreasing coverage at any point, up to the minimum coverage amount.
- Option to increase term length within the first 5 years.
- Simple online application to purchase additional coverage or policies.
- 10% savings on first-year premiums for couples.
- $10K in free life insurance for each of your dependent children.
- 30-day free cancellations.
With our simple online application process, you can get a free, no-obligation quote in seconds and apply for coverage in under 20 minutes.