Can I have more than one life insurance policy?

A life insurance policy ensures that your loved ones’ financial needs are taken care of if you pass away. But can you legally take out more than one policy?

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Life insurance is one of the best ways of ensuring that your loved ones are financially taken care of once you’ve passed away. But in a world full of so many financial obligations, you might be wondering whether one life insurance policy will be enough to take care of all of your loved ones’ needs.

Can I have more than one life insurance policy?

Yes, you can.

Unlike other insurance products, such as home insurance and car insurance that only allow you to take out one policy per person, it’s perfectly legal to take out more than one life insurance policy.

There’s actually no limit on the number of life insurance policies you can have in the UK – you can take out as many as you like.

Why would I need more than one policy?

For most people, one life insurance policy is usually more than enough.

However, there are situations where because of changing life circumstances or financial needs, you might need an additional policy.

Suppose you take out a life insurance policy after the birth of your first child. Later, you have two more children and realise that if you were to pass away, the insurance payout wouldn’t be enough to cover the needs of your now larger family.

Or perhaps after taking out a policy you purchase a new property with a larger mortgage. You realise that your existing policy wouldn’t cover that larger mortgage if you were to pass away. 

In such cases, it makes sense to have a second policy.

You could also take out a second life insurance policy written in ‘trust’, meaning that any payout is not included in the value of your estate and your children wouldn’t have to pay inheritance tax on it.

Do multiple life insurance policies make sense for couples?

If you are part of a couple, you have two life insurance options:

  • A joint policy (that covers two lives and that typically pays out when one of you dies, and then lapses)
  • Two single life policies

However, taking out two single life insurance policies could actually be better than one. Here’s why:

  • Your beneficiaries will get two lump sums if you both pass away during the policy terms.
  • You’ll have more flexibility regarding who gets the payout.
  • You do not have to cancel or amend the policy if you split up.
  • You will still have cover even after your partner’s death and therefore won’t have to take out a new and potentially more expensive policy at an older age.

Are there drawbacks of having multiple policies?

Although taking out more than one policy has several advantages, it also has a few drawbacks.

A second policy means an increase in the cost of your total premiums. If you take out a second policy when you are older and possibly less healthy, you are likely to face higher premiums.

Managing multiple policy plans also requires more understanding of policies and more paperwork.

Can I just change the terms of my existing policy?

Before buying a second life insurance policy, it might be wise to first talk with your current insurer to see whether it’s possible to adjust your existing policy either by increasing the sum insured or extending the policy term.

Naturally, your premiums will change if you adjust your policy. But it could turn out to be cheaper than taking out a second policy.

So before you take the plunge, compare the terms and costs of adjusting your existing policy with those of taking out a second policy.

Can I have policies with different companies?

Yes. There are no rules stopping you from taking out multiple life insurance policies with different companies.

However, it’s worth keeping in mind that you could actually get a better deal by sticking with one company. Some insurance companies offer a discount if you take out more than one policy with them.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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