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Can you have more than one life insurance policy?

Life insurance is something that can feel really complicated if you don’t know much about it or have never bought it before. One question that comes up quite often is if you can have multiple life insurance policies and if it’s worth having more than one.

Simply put, it is absolutely possible to have more than one life insurance policy. You will just need to think about if you really need more than one policy and what types of life insurance would work best for you.

Here, we are going to explain common reasons why people In the UK choose to have multiple life insurance policies, the different types of cover available and important things you need to watch out for.

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60-Second Summary – Can you have more than one life insurance policy?

A lot of people are curious about if they can have more than one life insurance policy and what the benefits are from doing this. You can technically have as many policies as you want or need (but you will need to be able to justify the amount of cover you have).

  • Life insurance companies are wary of fraud or money laundering, so if you want multiple policies you need to be able to explain why you want so much cover and what it is for.
  • As certain types of life insurance are designed for specific purposes (e.g. mortgage life insurance), it can make sense to have several policies to protect your home and your family. For example you may want a joint policy to cover your mortgage plus individual cover for you and your partner.
  • There will be some limits to think about when buying more than one policy or type of cover. It’s worth speaking to a life insurance expert if you need some extra help or advice in this situation.

Believe it or not, there isn’t a set limit to the number of life insurance policies that you can buy for one person or one household.

Why do some people have more than one life insurance policy?            

There are many reasons and circumstances where it can make sense to have more than one life insurance policy. The main example for this is if you want life insurance to protect your mortgage but also want family protection.

As mortgage life insurance is designed for one set purpose (repaying a mortgage), it can be useful to have a separate policy to cover other important expenses like:

  • Funeral costs
  • Repaying debts
  • School fees
  • Utility bills
  • Loss of income

You might also have a separate policy that includes critical illness insurance as an extra level of protection or a policy through your workplace as well as one you have bought for yourself.

That’s why it’s quite common and perfectly fine for people to have more than one life insurance policy, either with the same company or with different insurers.

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There isn’t a limit to the number of life insurance policies you can have. You should be careful though, as you don’t want to risk getting in trouble for fraud or money laundering.

You must be able to justify the amount of cover you need and insurers may ask if you have policies with other providers when you apply. Generally, it is reasonable to have anywhere up to 5 life insurance policies within one household. This could include a mixture like:

  • Mortgage life insurance and a joint life insurance policy (you and your partner)
  • Mortgage life insurance and two single life insurance policies
  • Joint life insurance and critical illness cover
  • Two single life insurance policies and two critical illness cover policies

Is it worth having two life insurance policies?

Many people feel that it’s worthwhile to have two or more life insurance policies as this lets you cover yourself for different amounts in each policy and have each one tailored to protect against one particular area of financial risk.

You will need to consider a few things though:

  • Can you afford to pay for multiple insurance policies long term?
  • Can you get the right level of cover you need in just one policy?
  • Would it be simpler to request a higher level of cover from one insurer? (no need for multiple applications and you wouldn’t need to keep track of several policies)

You are allowed to have several life insurance policies and the only main rule to remember is that you aren’t allowed to be ‘over insured’.

Basically, you will need to be able to justify that the amount of cover you have overall is reasonable relative to your income and what your life insurance pay out is meant for. This helps your family to avoid difficult questions when they need to claim, if it suspected that there is a chance of fraud or money laundering,

EXAMPLE:

John has an average income of £30,000 per year and a remaining mortgage balance of £200,000. He has a partner and no children. If he insured himself for £5 million, insurers may then question why he has so much insurance and will need extra evidence when claiming.

No matter if you have multiple policies with one provider or several, everything should work the same way in the event of your death. When your loved ones come to claim, they will just need to submit claims for each individual policy.

It’s sensible to ensure your loved ones know about all your policies and the details for each one, so they don’t miss out. Having an idea of this ahead of time can help avoid stress and make things simpler at an already difficult time.

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Common reasons why many UK households choose to have more than one life insurance policy include:

  • You want a higher level of cover than the provider can offer in just one policy
  • Your current provider won’t agree to increase the level of cover you have
  • You want to protect against two different elements of financial risk e.g. funeral costs and mortgage repayments
  • You and your partner want to have separate life insurance polcies with differing levels of cover
  • Your family situation has changed (e.g. a new child is born) and you can’t alter the beneficiaries for your current policy as it is written into trust

YES – In fact, many over 50s providers will suggest buying multiple policies to increase your overall level of cover.

How many types of life insurance are there?

There are many different types of life insurance available in the UK, which means you can choose to buy one (or more) policies that best suit the type of cover you need.

Can I have two life insurance policies with the same company?

YES – You should be able to buy one or several policies from the same insurer with no major issues.

You might choose to buy both a mortgage life insurance policy to cover the cost of your remaining mortgage balance and family income benefit, which would pay out a regular lump sum to support your loved ones.

Can I have two life insurance policies with different companies?

YES – You can have as many life insurance policies as you want and they don’t need to all be with the same life insurance provider.

There are different types of life insurance available so you may find that the insurance company that will work best for one of your policies won’t be the best option for others. Every household has different needs and you may find you and your partner wish to have different policies with different companies which is absolutely fine.

Can I have life insurance if I have death in service through my job?

YES – You should definitely think about getting life insurance even if you have death in service already through your employer. While death in service does provide some protection to your family in the event of your death, it’s not technically a life insurance policy.

This cover will only pay out a maximum of between 3x – 5x your annual salary which may no be enough to give your loved ones the level of financial support they need long term.

Whether you are looking at life insurance for the first time or you’re thinking of buying extra cover, it can be helpful to speak to a life insurance specialist. A life insurance expert will be able to quickly compare the best quotes for you and explain exactly which insurers will work best for your situation.

Our experts can help you work out the best way to structure your life insurance policies so their set up in the right way for the level of cover you need.

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Is it worth paying for life insurance?

Yes, if you’ve got children or financial dependents then you should have life insurance to protect them if you die. Martin Lewis and the Financial Conduct Authority recommend that you take out life insurance to protect your family and your home. Generally, life insurance premiums start from as little as £5 per month and will be cheaper for younger adults.

Common myths about life insurance:

  • Life insurance won’t pay out (pays out 98% of claims)
  • People with medical conditions can’t have life insurance
  • Life insurance is expensive
  • Savings can be just as effective as life insurance
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What is the average cost of life insurance per month?

Based on recent research carried out, the average cost of life insurance is approximately £38 per month and the average level of cover is £152,000. Life insurance premiums also vary dramatically from one insurance provider to another and you can reduce your monthly premiums by shopping around.

Fundamentally, life insurance premiums vary depending on your age, health and the amount of cover that you need, starting from as little as £5 per month. You can also get life insurance to protect your family and your home against financial loss if you die.

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Average cost of life insurance - iam|INSURED

What does life insurance cover you for?

Life insurance is a monthly renewable ‘term insurance’ contract that pays out a cash lump sum or regular payments on death to your family or beneficiaries. Policies are most commonly used for family protection or mortgage protection for your loved ones if you die and your household income reduces, plus the additional issues of losing a parent or carer.

Traditional life insurance will not exclude any pre-existing medical conditions and will cover suicide after 12 or 24 months. You can also use life insurance for business protection purposes as well as tax-efficient business life insurance for directors or key people.

What are the disadvantages of life insurance?

The biggest and most common problem that consumers have with life insurance is the cost and the monthly premiums. This is the top reason for policy cancellations and why more people don’t take out life insurance to protect their family.

Another key disadvantage with life insurance is that it holds no investment value, nor can you cash it in. Life insurance works like any other traditional general insurance policy (e.g. car insurance, house insurance, pet insurance etc.), you pay a monthly premium and it will pay out in the event of a claim. Some people decide to use savings instead of taking out life insurance but you need to make sure that you have sufficient savings to cover the costs of death for your family.

Why do I need life insurance?

The fact is that nobody actually ‘needs’ life insurance, but it is strongly recommended that families and couples have cover to protect their loved ones in the event of death. Martin Lewis recommends life insurance and says “this is something that every parent, partner, or person with any other type of dependent needs to consider”.

Life insurance financially protects your loved ones if you die and pays out a cash lump sum to repay your mortgage, pay for school fees, replace lost income, and pay for regular outgoings. Mortgage life insurance is not linked to your mortgage debt so you can use it to pay off some or all of your mortgage.

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