Life insurance: Can I have more than one policy?

The simple answer is, yes, but let’s delve a little deeper into it...

In the UK, you can legally have more than one life insurance policy in place. However it doesn’t always make sense to have multiple insurance policies and you may find it more beneficial to stick with just one policy and change the terms to meet your current needs. Some people do actively seek (or end up with) multiple policies though - for example having a single policy in place, as well as having a joint policy with their spouse. You may also have a ‘death in service’ benefit through your employer.

In most cases, it’s easier and more cost-effective to change the terms on a single life insurance policy, rather than having multiple policies. You can usually alter the terms of your life insurance to suit a change in your circumstances; like if you get married, buy a home, or become a parent. Common policy changes include the level of cover, the length of the term, increasing or decreasing the amount insured.

Why would I need two life insurance policies?

For most people, one life insurance policy (whether it be single or joint) – should provide adequate cover. However, you might want more than one life insurance policy if:

• You want a separate joint life insurance policy that pays out should you or your partner or business partner pass away within the term.

• You have several different liabilities to cover and want to tailor each life insurance policy to each specific need. 
   

• You want to avoid or reduce the amount of inheritance tax your family would need to pay, so you require a separate life insurance policy held ‘in trust’ so it won’t be included in the final value of your estate.

You may receive life insurance cover from your workplace – this is often known as death-in-service life insurance. It’s usually based on a multiple of your annual income, but this ties you to your employer and may not be enough to cover your mortgage and living costs, so a separate life insurance policy is usually a good idea. It’s also worth noting that if you leave your employer, you will likely lose your death-in-service benefit they provided.

Examples Of Multiple Life Insurance Policies

As stated above, it is very common to pair different types of policies together to cover certain assets and financial responsibilities. Here are some examples:

• Level term insurance: Value of payout holds value throughout term
  paired with...
  ​Over 50’s plan: Guaranteed acceptance with no underwriting

• Decreasing term: Value of payout decreases throughout term
  Paired with…​
  Family income benefit: Provides a tax-free monthly income

• Whole life: Guaranteed payout when you die
  Paired with…
  Mortgage cover: used to help pay off a mortgage

If you’re looking to cover different aspects of your life, for example, a mortgage and funeral costs, it’s likely you would benefit from having multiple policies.

In the above examples, it may be beneficial to have a decreasing term policy to cover the value of your mortgage, as well as, family income benefit to provide ongoing monthly payments to meet your family’s living expenses when you’re no longer around.

If you are unsure about which policies might suit your needs best, then consider speaking to an adviser, as they will be able to make recommendations for your cover and help prioritise your protection needs.

Can you claim on multiple life insurance policies?

If you have more than one life insurance policy, your loved ones can receive a payout from the individual policies, leading to a larger overall sum. However, they will have to claim on each individual policy and provide necessary details.

Do multiple policies need to be purchased at the same time?

You don’t need to purchase the policies at the same time, however, a discount may be possible if you do. As different types of policies will cover certain assets, it’s normal for you to develop a need for different cover over time.

For example, you may purchase a decreasing term cover when you buy your first home to protect your mortgage. Then a couple of years later, you may have a child and therefore want to also purchase the family income benefit to provide financial support for your family.

However, if you already had a child and were about to buy your first property, then it may be worth taking both covers out at the same time. You may be able to incur a discount on these too.

Is it beneficial to have multiple life insurance policies?

Depending on your financial circumstance, adopting an all-encompassing policy or multiple policies is up to you. However, as discussed, it can be beneficial to purchase multiple layers of cover to ensure all financial responsibilities are covered. It is also important to note that having multiple policies will require multiple premiums and, therefore a larger budget.

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At Cavendish, we do our best to make it as easy as possible to find the best policy for you – just let us know a few of your details and what you need from the cover, and we’ll do our best to find the right product for you.

Get In Touch

If you don’t currently have any cover in place or you’re unsure if your cover still meets your needs - the team at Cavendish can help. Speak to us today for more information and to get a quote for life cover.