What is Life Insurance Laddering?

Life insurance policies are not only incredibly useful, because they provide your family with the money they need after you are gone, but they are also more flexible than you might realize. You have the option to build a life insurance plan that works for you, commonly known as an insurance ladder, or life insurance laddering. This can help you save money while ensuring that you have the right amount of coverage at every stage of your life, so your family is financially protected for a great price.

How Life Insurance Laddering Works

illustration of a person holding a ladder walking to a dollar sign being held up high
Life insurance laddering allows you to have multiple policies for your different needs so you can save more money.

At the most basic level, life insurance laddering provides you the option to buy multiple life insurance policies with different coverage amounts and durations. For example, you might want multiple term life insurance policies that will expire at different times; laddering your policies will provide you with protection for different needs, such as a 20-year term life insurance policy for a mortgage and a 10-year policy for your children’s college tuition, or student debt. Each policy will serve a different purpose in your life, and will prevent you from spending extra money for coverage. 

Life insurance laddering is also a great way to make sure you’re not overspending on life insurance as you get older and pay down your bills, since your financial obligations will probably decrease over time, and you will need less coverage for expenses after you pass. Laddering policies will allow you to pay for the coverage you actually need and not the coverage you needed 10-30 years ago: for example, if you want a $1 million life insurance policy that would give you more coverage at certain periods in your life, you could ladder policies to achieve this with a:

  • 10-year policy of $500,000
  • 20-year policy of $300,000
  • 30-year policy of $200,000

This way, you ‘ll get the most coverage when you’re younger and have more expenses, and will have less coverage – and lower premiums – as you get older and have fewer financial obligations. 

Downsides of Laddering

Laddering is not for everyone, especially because you have to do some shopping and comparing to find multiple policies that fit your needs. One of the main downsides of life insurance laddering is it can be difficult to understand and manage the different policies; not only that, but your future needs are not defined yet, so choosing the right policies can be tough. To better understand if this strategy will work for you and help you save money, work with a licensed agent who can compare plans from different companies for you.

Can You Benefit From Life Insurance Laddering?

If you want access to different levels of benefits and want to reduce the price of your life insurance premiums, laddering policies could be right for you. Before considering laddering policies, though, speak to an agent, who can help you get a better understanding of what your future expenses and needs for your family might look like. You will also need to have an understanding of how much coverage you will need at different points in your life. Laddering will work for you if:womans hands, one holding a calculator and the other writing on a large piece of paper

  • You have large, but temporary, obligations
  • You have pre-existing conditions that could increase the cost of your insurance down the road

As we said, life insurance laddering is not for everyone, but it can be helpful for families who want to save money on insurance premiums, or for those who know what their future financial needs will be. But doing the work to calculate all of your future expenses, on top of researching each type of policy, can seem like a lot, so your best bet is to use online tools and work with an agent who can help you compare different policies from different insurance companies. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

About The Author:
Cassandra Love

With over a decade of helpful content experience Cassandra has dedicated her career to making sure people have access to relevant, easy to understand, and valuable information. After realizing a huge knowledge gap Cassandra spent years researching and working with health insurance companies to create accessible guides and articles to walk anyone through every aspect of the insurance process.

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