Can You Have More Than One Life Insurance Policy?
It’s possible to have more than one life insurance policy, so you have the right amount of cover for your circumstances. But should you consider if adjusting your existing policy might be possible first?
You can have more than one life insurance policy. There are no restrictions on how many life insurance policies you can take out. You can have different types of policies across a number of insurers, if that means you get a level of cover that’s right for your circumstances and finances.
But just because you can, it doesn’t necessarily mean it’s the best course of action. For simplicity’s sake, and so you don’t pay more than you need, you may want to consider asking your current insurer if you can adjust your current policy to reflect these changes.
Just bear in mind that age alone can increase policy premiums over time. So you could be paying more for the same amount of cover, just because time has passed since you took out the original policy.
How many life insurance policies can you have?
There is generally no limit to how many policies you can have, and they don’t have to be with the same insurer. You can have different policies from different providers if this suits you better.
If you already have a life insurance policy with an insurer and want to take another policy out alongside that, there may be a maximum total amount of cover that it will agree to. But it must also be cover that you need and not be considered to be an excessive amount.
So it’s less about how many policies you have, and more about whether the amount of cover you have is a realistic and necessary amount of cover for you.
It’s worth knowing that once you reach a certain cover amount the insurer may make extra checks. This might mean asking for more health information from your GP or for you to have a medical.
Why you might want more than one life insurance policy
Over the course of potentially decades while you hold a policy, your financial commitments, income and personal circumstances might change. This may mean you need more cover than you already have, or just a different type of cover.
A few situations where you might consider taking out another policy could be:
- If you have life insurance with your employer, called death-in-service benefit, but want a higher level of cover, or a policy that would cover you if you leave your job.
- If you buy a property and want to cover mortgage repayments or the whole mortgage debt, or if you move to a new home and need more or less cover in line with that.
- If you have a first child or your family grows, or other people have become financially dependent on you, your cover would be enough to take care of them financially.
- If your income has gone up and you want your family to maintain their standard of living if you and your income are no longer there.
- If you have separated from your partner and can’t change a joint to a single policy, and want to take out standalone cover.
- If you’ve moved in with a long-term partner or are married or in a civil partnership and want to have that protection in place for them, or a joint policy with them.
- If you want whole of life cover to help cover a potential inheritance tax bill on your estate when you die, or would like extra cover to help pay for your funeral.
It’s a good idea to review your cover regularly, as well as when milestones happen. That way, you can consider these kinds of life changes and see if your cover amount is still right for you.
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Can you change your life insurance policy instead of taking out a new one?
You could ask your insurer to amend the cover for the policy you already have, instead of taking out an additional policy. This might have a few potential benefits, including:
- It could make things more streamlined for your beneficiaries, and for your paperwork and finances.
- You may not need to answer any additional health questions to get extra cover.
- You won’t have to pay higher premiums for a new policy just due to being older if you are keeping the same policy.
Be aware that changing existing cover rather than taking out a new policy can be more expensive. So whether you are increasing or decreasing your level of cover, make sure you compare your original policy amount and costs against amended ones. Just your age increase can affect premiums, so that cover taken out five years ago will cost you more now.
How to make changes to your policy
You can get in touch with the insurer to ask if changes would be possible on your existing policy. Your cover should align with your changing needs over time, and insurers are usually ready to address that. You may find that they will be able to:
- change the cover amount
- change the cover term
- remove someone from your policy
Whether you can amend your existing policy or the insurer offers an additional policy that runs alongside it will depend on the type of change you are asking for. You may be able to ask for minor changes through an online form or by phone, or the insurer may ask that you fill in another application form for your existing cover.
There is no guarantee that you will be able to make the changes to your policy. This will depend on the insurer, your policy and the type of changes you’re after. The terms and conditions of your policy may explain what you can and can’t change about your cover.
If you’re not sure if you should make changes, or what changes would be right for you, speak to a life insurance broker or a financial adviser.
Can you claim on two life insurance policies?
Yes, no matter how many policies you have, your loved ones can make a claim on each of them if you die while the cover is in place. This applies whether your two insurance policies are with different insurers or with the same insurer.
A claim would need to be made on each of them, though. This is where having the admin in order so it’s clear where they can find the policy details is important, to make the process easier for them.
Of course, the claim must be valid under the terms of the policy. According to figures from the Association of British Insurers (ABI), most life insurance claims are paid out, with just a small number declined for reasons such as the policyholder giving inaccurate information when they applied, or unpaid premiums.
Is it good to have more than one life insurance policy?
You may find it useful to have separate policies for specific purposes, such as putting a policy into a trust, so you can give instructions about what happens to the lump sum. Or you may want policies that run for different periods of time if you have term life insurance.
Think carefully before cancelling a policy and taking out a new one. This is an option and may work if, for example, you want a term life insurance policy and you have since quit smoking and are free from medical conditions.
But bear in mind that when you cancel a life insurance policy outside the cooling-off period (within 30 days of the policy start date), you won’t get your premiums back. What’s more, the older you are, the higher the premium you will be offered. Changes to your lifestyle, job or health may also have an impact on what you’ll pay.
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Holly champions clear, jargon-free writing. She’s been creating finance content for leading organisations for over 10 years. Read more