Can I Have More Than One Life Insurance Policy?

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Multiple life insurance policies

To start, a story:

One of our best advisors has been in the life insurance industry for a long time and remembers one customer from his previous job long ago. The customer would call two times a year and take out a new life insurance policy each time. It was a relatively small amount of cover of £50,000 each time, but the customer was confident and seemed to know what he was doing, so these multiple life insurance policies just kept piling up. After ten years, he had approximately 20 such policies in place, totalling a million pounds of life cover!

Our advisor came across this man at the end of the ten years, and he questioned the reason for getting all these policies. It seems the gentleman in question travelled to America twice a year and thought it was wise to have £50,000 in cover during each trip to make sure that his family were looked after if the plane crashed or something happened while he was abroad. Despite his confident tone, he didn’t realise that the policies were long-term and had assumed that each one ended upon his return to the UK. He was paying premiums for a million pounds worth of cover he didn’t realise he had!

Of course, our advisor soon sorted it out and he ended up with a very reasonable term policy that fit his actual needs (both when abroad and while in the UK!).

So to answer the question ‘can you have multiple life insurance policies?’ - Absolutely!

Why would you have more than one life insurance policy?

One of the key factors to a life insurance policy is the idea that your premiums are set at the time of application and will never change. This is great, because you were younger and (most probably) healthier when you took out a policy, and so the monthly direct debits are lower than you’d likely be able to get with the same criteria today.

However, if you ever want to make a change to your policy, you are often left with losing the great deal you got the first time around. It’s often better to leave that policy in place and get a new policy on top of it instead.

Another reason to have more than one policy is to take advantage of the different types of policies available. You may have a decreasing term policy to cover your mortgage and a second level term policy to protect your children financially over a certain number of years, for example.

Can you claim more than one life insurance policy?

It doesn’t matter how many policies you have, nor how many different companies they are with. Each one is treated separately, and each one will be claimable upon your death by the people listed in the policy as a beneficiary.

With multiple life insurance policies, you may have multiple different beneficiaries, or they might all go to the same person – it is completely up to you.

The top five reasons for taking out a second life insurance policy

1 – Expanding the family

When new little ones come on the scene, many people see fit to increase their life insurance. After all, what is good for a single person may not suit a couple, and what is great for a couple might not provide enough cover for a family. Taking out extra cover to make sure the family is properly looked after is the top reason for putting a second policy in place.

And, as mentioned above, your earlier policy might simply be too good to lose. With low premiums set when you were younger and healthier, cancelling it and trying to replace it would result in a much poorer deal – better to keep it and supplement it with additional policies.

2 – Buying a house

Many mortgage lenders insist on you having appropriate life insurance to cover the mortgage should the worst happen. Taking out an additional decreasing-term policy to ensure the home is not at risk is a strong reason for a second policy.

3 – A change in relationship status

Life changes. Situations such as divorce or separation may give you cause to re-evaluate your life insurance and something which worked before may want to be reassessed.

4 – Change in work status

Doing well in your career could lead you to improve your lifestyle and the old policy might well no longer cover you or your family in the way you want. Increasing your cover by additional policies is a simple way to reflect this success.

5 – Having the best-suited policies for each need

Mortgage? Get a decreasing term life assurance policy.

Making sure the kids’ education is taken care of? A level term policy that runs until the kids are out of full-time education seems sensible.

Want to leave an inheritance? A different level term policy to retirement may be more appropriate.

Covering the cost of the funeral? A smaller whole-of-life policy ensures that no matter when it happens, no one will be struggling pay for your funeral.

Keeping the estate together by paying the inheritance tax? A whole-of-life policy set to cover the projected tax will stop the family having to sell their home.

Doing all the above? Maybe five policies are the way to go!

Is it just life insurance? Can you have two critical illness policies?

When you purchase cover, whether it is life insurance or critical illness cover, you pay for a policy that states that you can claim under certain circumstances. Provided you meet the criteria, then you can claim with as many policies as you hold. Claiming with one insurer does not invalidate your cover with another.

Note that different providers have different sets of criteria for critical illness and though you may qualify for one, you might not for another.

How much life insurance do I need?

The level of cover you need is very much dependant on your circumstances. Do you have a mortgage? Any dependants?

As a rule of thumb, we suggest ten times your annual salary in cover, but you may well need more if you have a large family or significant needs for substantial insurance.

Remember, you can always get more life cover by taking out a second policy, but as health and age are factors, you may not get as good a deal later on down the line.

How do I go about applying for multiple life insurance policies?

Give us a call at Quick Quote Protect!

We can help you get the precise level of cover possible, whether that’s to arrange for multiple life insurance quotes from different insurers, or just to advise you on a single policy that works well for your needs.

With all types of cover available, including over-50s life insurance and multiple forms of critical illness cover, we will find the best life insurance policy in the UK to suit you.

Give us a call today or fill in our contact form to have an expert advisor call you back at a time convenient to you.