Coverage Considerations

When buying life insurance, you’ll need to ask yourself a few important questions. What kind of policy best suits your needs? How long do you need the protection that life insurance coverage can provide? And perhaps most importantly, how much life insurance do you need?

The answer to the last one can be a bit tricky. You may find that even if you have an ideal number in mind, there are other limiting factors that could impact how much life insurance you can buy in the first place.

Coverage Limits Exist

Generally speaking, life insurance is meant to financially protect your family and secure your existing wealth… but it’s not necessarily meant to create wealth, per se.

Yes, an influx of cash from life insurance proceeds can be life-changing for your loved ones, but if you’ve correctly calculated how much life insurance coverage you need, it will last just as long as your loved ones need it to.

Beyond your family’s unique needs, though, there is another factor influencing how much life insurance coverage you buy: policy limits.

Common Limiting Factors

Each carrier sets their own coverage limits, whether you’re buying term or whole life coverage or even opting for something like a final expense policy. Within a carrier’s overall coverage limits, however, how much life insurance coverage you can have may also be dictated by personal limiting factors.

Here’s a look at some of the most common limiting factors when it comes to buying a life insurance policy, and how they each affect the coverage you’re able to get.

Your Age

You probably already have heard or been told by experts that as you get older, buying life insurance becomes more expensive and your options get more limited. At a certain point, for instance, you may only be able to select specific riders on your policy or will only be able to purchase shorter term lengths.

In addition to that, though, you should expect to see coverage limits slowly creep downward as you approach your 50s and 60s. The older you are, the less likely it is that you’ll be eligible to buy a carrier’s maximum amount of coverage… and at some point, you will also be unable to purchase a new life insurance policy from many carriers.

While you can certainly buy life insurance at age 50 or 60, buying earlier will allow you to choose more coverage, and at a better price.

Your Health

Your health and medical history — and even that of your immediate family — will certainly affect how much you pay for a life insurance policy. But you may not realize that it could also limit how much coverage you’re able to buy in the first place.

If you have a history of certain medical conditions, carriers can (and often do) impose coverage limits during the underwriting process. Common conditions include heart disease and diabetes, or cancer that’s been in remission. If you have a current cancer diagnosis, you may not be able to buy coverage at all; if you are, you could be limited to guaranteed issue policies or lower limits of coverage.

The Carrier You Choose

It probably goes without saying, but every life insurance carrier sets its own rules and limits. Some carriers offer up to $2 million in coverage while others allow customers to buy $8 million.

You may want to shop around with multiple carriers before buying, depending on how much coverage you need.

Need to find a policy that fits both your coverage and budget needs? LeapLife is here to help! Through LeapLife, you can compare life insurance policy options from a number of top-rated carriers at one time, and the process only takes a few minutes online.

The Type of Policy You Buy

Each life insurance carrier offers its own unique menu of policies, each with varying features and coverage options. While some carriers may allow you to buy the same amount of coverage whether you’re choosing temporary (term) or permanent coverage, others may have different limits.

For example, you may be able to buy up to $5 million in whole life coverage, but only a maximum of $3 million in term coverage. Also, you can expect that guaranteed issue and final expense policies will have considerably lower coverage limits than their “standard” policy counterparts.

Your Income

You probably already have heard or been told by experts that you should buy enough life insurance to cover about 10 years’ worth of your income… but you might be surprised to learn that your income may also limit how much you can buy in the first place.

Insurance companies often have maximum coverage limits based on a set multiplier of your annual income. While this can vary from one company to another, the rule of thumb is that you generally can’t buy more than 20 to 25 times your income without justification.

This means that if you make $50,000 a year, you probably won’t be able to buy $6 million in term coverage.

Bottom Line

Nearly all of the top-rated life insurance carriers today (such as those that you’ll find through LeapLife) offer coverage well into the millions of dollars. For many of us, this is more than enough coverage and we don’t really need to worry about maxing out; for others, though — especially older applicants or those with certain health conditions — being able to buy enough coverage is a genuine concern.

By shopping around from multiple different carriers, you can find the policy with the best coverage options at the right price, often in just minutes.

LeapLife makes it easy to get matched with A (or higher) rated insurance companies offering up to $5 million in coverage and terms as long as 40 years. If you need help building your perfect policy, LeapLife’s agents are also available to you by phone.