Can you have more than one life insurance policy?

Life insurance can help protect the people you care about financially if something happens to you.

Sometimes, one life insurance policy might not be enough. You might have different things you want to cover, like mortgage repayments or money for your children’s future.

This article will help you understand:

• Why life insurance is important
• Why you might want more than one policy.
• If you can have more than one life insurance policy.
• What to think about before getting extra policies.
• How to manage your different policie
• How having more than one policy affects a claim.
• How your loved ones benefit from multiple policies.

Why life insurance matters

Life insurance can help provide financial security for your loved ones if you pass away. It gives them money that can be used for various things.

Lots of people get a life insurance policy to help with mortgage repayments, cover day-to-day living costs for their family, or pay towards funeral expenses.

There might be times in your life when you think about getting more than one policy to cover different needs.

Common reasons for taking out more than one life insurance policy

People often get more than one life insurance policy for different reasons. Here are some common ones:

• Different goals: You might want one policy to cover your mortgage and another to make sure your children can afford university fees.
• Life changes: As your life changes, like having children or taking on a bigger mortgage, you might add more cover.
• Adding to work cover: If your employer offers life insurance, it might not be enough. You could get another policy to top it up.
• Different types of cover: You might want a policy that lasts for a set time (term life insurance) and another that covers you for your whole life (whole life insurance).
• Managing costs: Sometimes it can be cheaper to take out smaller policies at different times rather than one very large one.

Can you have more than one life insurance policy?

You can have more than one life insurance policy. It’s legal and quite common for people to have multiple policies.

There is no strict limit on how many policies you can hold. However, when you apply for new policies, insurers will look at the total amount of cover you would have across all your policies. They want to make sure the total amount makes sense for your financial situation.

It’s important be honest and open when you apply for any life insurance. You must tell each insurer about any other policies you have or are applying for. If you don’t, it could cause problems when your loved ones try to make a claim.

Your different policies can be with the same insurance company or with different ones. The most important thing is to make sure each policy is needed and that you can afford to pay for all of them.

Things to consider before taking out multiple policies

Before you decide to get more than one life insurance policy, it’s a good idea to think about a few things:

• Can you afford another policy? Think about whether paying the premiums for all your policies is realistic in the long term.
• What do you need to cover? Are you trying to cover separate things? For example, one policy for your mortgage and another for your children’s future education costs?
• How long do you need the cover? Do you want different policies to end at different times? For example, one to cover your mortgage until it’s paid off, and another to cover your children until they are adults.
• Do you already have cover? Check if you have any life insurance benefits through your work or a joint policy with your partner.
• Be honest on applications: When you apply for a new policy, you will need to tell the insurer about any other life insurance policies you have. Insurers may also check this information themselves.

Managing multiple life insurance policies

Having more than one life insurance policy means more to keep track of. Here’s some helpful information:

• Keep your documents safe: Store copies of all your policy papers together in one secure place.
• Make a list: Write down the policy number, the name of the insurance company, and when each policy ends. This makes it easier to find details quickly.
• Check them regularly: Life changes, so it’s a good idea to review your policies regularly. Especially after big life events like moving house, having children, or changing jobs. This way, you can make sure your cover still meets your needs.
• Keep policies updated: Make sure the people who will receive the money from your policies (your beneficiaries) are up to date.
• Tell someone you trust: Let a family member or the person who will deal with your estate know where to find your insurance documents.

Will having more than one life insurance policy affect a claim?

Having more than one life insurance policy should not stop a claim, if your application was honest and correct.

Your loved ones can make a claim on more than one valid policy if you pass away. Each policy will pay out based on its own rules and conditions.

It is very important that you give accurate information when you apply for each policy. If there are differences or false information, it could cause delays or even mean the claim isn’t paid.

It will be the person dealing with your estate’s job to make a separate claim with each insurance company.

How does this impact your beneficiaries?

Having multiple policies can benefit your loved ones in several ways:

• Multiple payouts: Your beneficiaries can get money from all your valid policies.
• Different beneficiaries: You can set up policies so that different people get the money. For example, one policy could be for your partner, and another for your children.
• Using a ‘trust’: You can write a policy ‘in trust’. This means the money from the policy goes directly to the people you want it to, often separate from your estate for inheritance tax purposes without long probate delays.
• Make it easy for them: Keeping all your policy details neat and organised will help your family during a difficult time.

Key points to remember

It is often helpful to have more than one life insurance policy. Here are the key things to keep in mind:

• You can have multiple life insurance policies to cover different financial needs
• Always be honest on your insurance application forms.
• Regularly review your policies as your life changes.
• Make sure your loved ones know about your policies and where to find the details.

Thinking about your future finances is a big step. We hope this information helps you feel more confident about your life insurance choices.

The right type of insurance for you depends on your personal circumstances. If you are unsure which policy to choose, speak to a financial adviser, who can take you through the options available.