Is it better to have one big policy, or several smaller policies?

General
1

I feel like stacking several policies allows you to ladder the coverages and spreads the insolvency risk. Any particular benefit to going with one big policy?

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2

Your idea spreads out the insolvency risk, but you lose the advantage of the lower cost per dollar for a larger policy. Most insurers offer “rate bands” where the cost per dollar decreases as the coverage amount increases. For example, the rate for coverage between $100,001 and $249,999 is lower than the rate for coverage between $50,000 and $100,000. So, getting a policy at the lower end of a larger rate band is cheaper than getting a policy at the upper end of a smaller rate band.

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3

I see. Cheaper overall to get a bigger face value. Good point.

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4

Choose highly rated companies to minimize insolvency risk.

Higher face amounts often come with lower pricing breaks, so a single policy can be more cost-effective. Unless you plan to invest millions in a high cash-value policy, you likely don’t need to worry about it.

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5

Best rating system to refer to is AM Best? Or other ways to evaluate?

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6

It depends on your needs. One big policy might be simpler, but several smaller ones can offer flexibility and manage risks better. Consider what fits your situation and goals best.

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7

Feels like staggering policies fits me better because I’ve gotten married and had a kid in the last few years. So I’m just adding to existing policy.

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8

I’m in a similar boat, just got my first job and looking into life insurance too. From what I’ve read, having several smaller policies might give you more flexibility as your needs change over time. But one big policy seems simpler, fewer premiums to manage. I’m still figuring out which way to go. Maybe it depends on how much control and flexibility you want down the line.

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9

Banner will let you ladder policies based on lengths and will only charge 1 policy fee

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10

As a small business owner, you might find that having several smaller policies offers more flexibility and adaptability. However, a single large policy could simplify things if it meets your needs. Talk to a financial advisor to find the best approach for your specific goals and challenges.