Can I have more than one life insurance policy?
Life insurance can be valuable, but how does it work – and can you have more than one policy? We explore everything you need to know.
Can you take out more than one life insurance policy, and is it a good idea?
We explore how simultaneous life insurance policies work, whether any restrictions apply and what to consider.
Summary
There is no legal limit to the number of life insurance policies you can hold.
Life insurance is a type of financial protection that pays out money in the event of your death.
There are advantages and disadvantages to having multiple policies.
How many life insurance policies can I have?
In the UK, there’s no legal limit to the number of policies you can hold, solely or jointly, and you’re free to purchase different policies from various providers.
But there are limitations as many insurers have a maximum benefit amount that will apply to all your policies cumulatively, including those from different providers.
Here’s an example scenario that will pose no legal issue: You enter a relationship with your partner, and you both already have individual life insurance policies.
After a few years, you decide to take out an additional joint policy together, becoming dual policyholders.
You can take out as many life insurance policies as necessary. If you’re considering this, there are a few things to consider.
What is life insurance, and how does it work?
Life insurance is a type of financial protection policy that pays out money to your beneficiaries in the event of your death.
It can be purchased individually or jointly, and your insurer can provide payouts as either a single lump sum or a series of payments.
There are two main types of life insurance:
1. Term life insurance: This type of insurance policy lasts for a specified time, which could be anything from one year to 20 years. Term life insurance can be decreasing, level or increasing, with higher premiums attached to level and increasing policies.
2. Whole life insurance: This type of insurance lasts for your whole life. It covers you whenever you die, but since it is more extensive than any term policy, it comes with steeper monthly premiums that won’t be viable for some people.
As with all insurance, the amount paid out is determined by the level of coverage. And in turn, the amount of coverage determines the cost of your monthly premium.
The benefits of multiple life insurance policies
You may decide to take out multiple life insurance policies due to any of the following:
Your situation has changed, and your existing life insurance policy doesn’t offer enough cover.
You’ve made lifestyle adjustments that could allow you to access a better premium than the one available to you when you took out your last policy.
You and your partner would prefer individual life insurance policies instead of a joint one (meaning your household would have multiple policies). This way, the surviving partner remains protected if the other passes away.
You have two or more aims with your insurance, such as to provide your family with a payout from a whole life policy if you die and to protect your mortgage debt with a decreasing term policy.
The disadvantages of multiple life insurance policies
There are a few drawbacks to consider before taking out several life insurance policies, such as:
It may be possible for you to adapt an existing policy.
If you attempt to take out a second policy at a different life stage than your first, you may find that the cost of premiums has considerably increased due to your age and health.
The more policies you have, the more premiums you’ll need to pay, and the less you’ll be able to save.
In many cases, you could be better off if you opt for specialist cover, such as income protection insurance, instead of taking out a second life insurance policy.
According to research by Direct Line in 2022, only 35% of adults in the UK have a life insurance policy.
So, if you have one in place, you’re already in a strong position.
Having read this article, you’re now also in a strong position to decide whether an additional policy would be beneficial in your particular circumstances.
If you have any questions, concerns or confusion in this area, get in touch with a qualified insurance adviser for guidance.
Unbiased can connect you with an experienced independent professional so you can find the right insurance policy for your needs.