Getting more than one term life insurance policy to spread out different amounts of coverage over the course of a designated length of time can be a great and very cost-effective way to obtain the life insurance you need for the specific time-frames you need it most—such as until the kids are out of the house, the mortgage is paid, or retirement savings are at an ideal level. In the life insurance industry this type of planning is commonly referred to as “laddering” insurance coverage, and it is most effective when it is connected to a financial plan to make sure that when the insurance coverage decreases your need for that insurance amount has gone away.
So, for example, you may need $2,000,000 of life insurance right now to cover expenses such as paying off a mortgage, raising your children, and ensuring enough money to support a retirement plan. However, after a certain amount of time has passed, your insurance needs will likely change, as your mortgage will be paid-off and your children will be self-supporting (hopefully!). So, to plan for this, you could split the total insurance amount of $2,000,000 over two or three policies (ex: 10 and 20-year term or 15, 20, and 30-year term). This way you could set-up a plan to have a $500,000 / 15-year term to pay off your mortgage, a $1M / 20-year term to raise your kids and pay for their college, and a $500,000 / 30-year term to support your retirement plan. Then, when your mortgage is paid off in 15 years the corresponding 15-year term life insurance policy will no longer be needed and will be dropped; likewise with the 20-year term when the kids are on their own, and the 30-year term when you reach retirement.
Setting up your life insurance plan like this, with multiple term life insurance policies, will cost you less than if you were to purchase one $2,000,000 / 30-year term life insurance policy. Additionally, there are companies that will give you a discount when you purchase more than one policy with them at the same time.
Of course, your specific financial situation and future plans should always be taken into account when determining how much life insurance to purchase and if more than one policy is needed. Nevertheless, laddering coverage can be a helpful and cost-effective option if you anticipate needing less life insurance as you get older and complete different stages in your life.