Life insurance is so important and valuable that people often think having two policies must surely be better than one, but can you have more than one life insurance policy? In short, yes you can. There are no limits as to how many life insurance policies you can acquire.
Sometimes having multiple life insurance policies can help cover financial commitments in a range of different scenarios. However, mixing and matching policies isn’t always the best idea. In this blog, we’ll explore the benefits and logistics of a life insurance policy in greater detail.
What is a life insurance policy?
Life insurance can bring peace of mind by keeping you and your family protected if the worst were to happen. It can act as a safety net for loved ones, help cover living expenses, reimburse medical bills, and even pay off outstanding debts.
Some individuals like to take out multiple policies to ensure all aspects of their financial responsibilities are covered. Although you can layer multiple types of insurance policy, it’s important that you evaluate your decision thoroughly as it might not be the most efficient way to have insurance cover.
Different types of insurance policies
There’s a type of insurance to suit every stage in your life. Picking the right type of coverage can mark the difference between disaster and diversion.
- Income protection: insurance pays out part, or all, of your lost income.
- Mortgage protection: insurance pays off your outstanding mortgage payments.
- Life insurance with critical illness protection: insurance pays a lump sum upon the diagnosis of a critical illness as outlined in the terms and conditions.
The best way to find out which type of insurance is best suited to your needs is by seeking out professional advice from an Independent Financial Planner.
How many life insurance policies can I have?
Legally speaking, there are no limits as to how many life insurance policies you can purchase in the UK. You can acquire as many as you need to cover outstanding financial commitments at the time of your passing or whenever you need them most, if your policy provides funds during your lifetime.
However, life insurance companies won’t advise you to take out more policies than necessary. Having multiple policies may not be cost effective and may not truly meet your needs, so it's unlikely that you’ll be approved for further coverage if you already have multiple life insurance policies. You should only take out multiple policies if you need to cover an array of financial obligations.
Why would I want or need multiple life insurance policies?
You never know what life may throw your way and, as we get older, our responsibilities and goals inadvertently change. You may find that your current policy no longer suits your needs or that you’re simply in need of more coverage.
Overall, individuals acquire additional life insurance policies when they need more financial protection. If you have a wide range of financial liabilities, you may need more than one policy to cover your obligations or, adversely, you may wish to review your existing policy to include more coverage and benefits.
For example, let’s say you are the sole breadwinner in your family, and you’ve recently purchased a home. Do you need life insurance for a mortgage? If you don't have enough savings to cover your mortgage commitments, it may be wise to put a safety net in place.
Generally speaking, there are numerous reasons as to why some people choose multiple life insurance policies rather than one. Ultimately, it's all about finding a policy, or several policies, that fits your bespoke needs.
Why should I avoid getting more than one life insurance policy?
Taking out multiple life insurance policies also means paying multiple premiums every month. It may be counterproductive to pay three different premiums when you could purchase a more comprehensive policy instead.
Another drawback of having multiple policies is that you may be subjected to a medical examination for each life insurance policy. Not all exams are invasive, however, the process itself can be rather time-consuming.
Finally, you could also find managing various premium payouts rather confusing. If you miss one of your premium payments, you could accidentally cause one of your policies to terminate.
Other FAQs about life insurance
We’ve already addressed a few commonly asked questions about life insurance policies, but below are a couple more:
How does life insurance work?
After reaching out to an insurance provider and agreeing to a contract, you will pay a monthly premium in exchange for your policy. If you pass away within the terms of the contract, a death benefit, or lump sum, will be distributed to your beneficiaries.
How much is life insurance?
Depending on your age, health, level of coverage, and length of your policy, the cost of your monthly premium will vary.
How much life insurance do I need?
Overall, different individuals have different goals. The amount of life insurance a person needs is dependent on a number of factors.
You may want to leave a legacy behind for loved ones or you may simply need enough coverage to pay off your mortgage. Evaluate how many financial commitments you have and whether you can cover these in the event of your death.
You should also consider whether you can afford to be unpaid during your lifetime. For example, if you were to fall ill, how would you handle your responsibilities? These are important questions that can help determine how much insurance you need.
As a couple, should we consider joint life insurance policies?
Joint life insurance policies can be appealing because you only need to pay one premium to cover two parties. Although you may be saving money on a monthly basis, it could be more costly in the long run.
Typically, joint life insurance policies will only pay out once. This leaves the remaining partner at a disadvantage, as they will need to seek out a new policy at a later stage in life and they may be faced with higher premiums.
Another disadvantage of a joint policy is that you will both be faced with inflated premiums if one is deemed high risk or has less desirable health. For example, if your partner is a smoker and you’re not, this will affect your premiums.
Can I get multiple life insurance policies with different providers?
Yes, of course. You don’t need to use the same provider for all of your policies. Make sure to compare quotes from different insurance providers to secure the best deal possible.
Can you change life insurance policies?
Yes, you can change life insurance policies. However, you may be faced with cancellation fees and higher premiums, so make sure you are confident in your decision.
All in all, a comprehensive life insurance policy can offer you and your loved ones the peace of mind you seek. It’s an excellent way to ensure your family and commitments are cared for, even when you are no longer here.
Layering multiple policies can be beneficial if your circumstances require that level of financial protection but, more often than not, you can receive the same benefits with a single policy.
If you still need any advice regarding life insurance policy, Efficient Portfolio works with a wealth of professionals who will be able to advise you further. Don’t hesitate to contact us today.