How to Ladder Life Insurance Policies

dad and son laddering life insurance

In this Article

The laddering strategy is a way to save money by stacking life insurance policies to ensure you’re only paying for the coverage you need during different life stages. Laddering policies can help you secure more affordable rates, and this strategy is great for people who know they will need different amounts of coverage at different points in their life.

How the ladder strategy works

As you get older, you probably won’t have as many financial obligations – perhaps your children are grown, or you no longer need financial protection for a small business or outstanding debt. This means that you would only need life insurance coverage to cover a few expenses, such as your mortgage or medical bills.

The ladder strategy ensures that you’re only paying for the coverage you need now rather than the coverage you needed when you got your policy 10 or 20 years ago.

By purchasing term life insurance with different (shorter) term lengths, you can ensure that your coverage matches your needs over the years. Since you can get the most affordable rates when you’re young and healthy, many people like the idea of qualifying for several policies at once with term lengths that expire at different times.

how laddering life insurance works
You can use the ladder strategy in two ways
  • Buy several policies at the same time with different term lengths (for example, one policy with a 20-year term and one with a 30-year term)
  • Buy one term life policy for now and purchase additional term life policies later (you might buy a longer 30-year policy now and then add a 10-year policy after you have children or accrue some additional debts) 

With either option, you’ll secure affordable monthly premiums and a more exact amount of coverage. For some people, this is a better option than purchasing a singular whole life insurance plan.  

Example of life insurance laddering in action

Having a larger amount of coverage during your working years, or during the time that you have young children, ensures that your loved ones are financially protected if anything happened to you. During these early years, you will want to have a larger death benefit to cover financial obligations for your young children, student loan debts, or mortgage payments.

However, after 20 or 30 years, your children will be financially independent, and you won’t have the same costs that you did back then. By purchasing the policy with the largest coverage amount first, it’ll expire after the 10-year period you have financial dependents and you can lean on your other policies that offer less coverage and more affordable premiums.

For example, a young and healthy 27-year-old woman might purchase three term life insurance policies* with differing term lengths.  

  • Term life policy 1: $500,000 in coverage for 10 years – $26/month 
  • Term life policy 2: $300,000 in coverage for 20 years – $22/month  
  • Term life policy 3: $200,000 in coverage for 30 years – $28/month  

Laddering these three policies would provide her with $1 million in coverage now, and over 30 years her policies would taper off and she’d be paying less money in premiums after each policy expired. If this individual were to purchase a term life policy with $1 million in coverage for 30 years, she would be paying $95 every month for that entire term. By laddering three shorter policies, she is paying less money during the lifetime of her policies.

*Source: These are the lowest quotes we found for a healthy, non-smoking 27-year-old female for the policy types shown. 

Who doesn’t need to use the ladder strategy?

Laddering can be helpful for some people, but it’s not recommended for everyone. 

  • If you are uncertain what your financial future will look like, it’s best to purchase a singular policy that covers a longer term and offers more security for whatever life brings.
  • If you have a special needs child who will need continued or more complex financial support, you will want to purchase a singular policy.
  • If you have people who would be financially impacted by your death long after you’re gone, they’ll be better protected with a singular policy with a level coverage amount and death benefit.  
Your Quility advisor can help you find your perfect insurance match

If you’re ready to take the next steps towards a financially secure future, we’re here to help you make the best decisions for your budget and needs. Get an estimate for your premium price and complete our simple online application today.

If you have any questions about the laddering strategy and how it can work for you, Quility’s trusted insurance advisors are just a click away. Your advisor can help you get the best plan (or plans) in place for your budget.

Let’s Get Started

If you are ready to get coverage now, our online application takes less than ten minutes.

The rates mentioned within this article are based on past examples of quotes provided to a standard applicant based on their age and overall health at the time of their application. This is an example of the kind of rates you can expect. Actual rates and quotes may vary.

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Calie Brummer is a staff writer and Head of Digital Communications at Quility Insurance with a focus on financial well-being and life insurance solutions.