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Can I have more than one life insurance policy?

Can I have more than one life insurance policy?

You’re allowed more than one life insurance policy, but that doesn’t mean you should. It’s often better to have one life insurance policy that meets all of your needs, but there are occasions when holding multiple policies could suit you better. There isn’t a legal limit to the number of policies you can hold, so whether or not you should seek out a new policy depends on your circumstances.

Kamran Altaf
From the Life team
minute read
posted 3 DECEMBER 2019

Holding multiple life insurance policies: 7 key points

Here are some of the key things you should know about holding more than one life policy.

1. A new life policy could offer new (potential) benefits

Taking out a second life insurance policy, written in ‘trust’, could mean that any pay-out is kept separate from your estate, the value of which is worked out after you die. Your estate is the sum of your money, property and possessions when you die.  Any proceeds from a life policy held in trust wouldn’t typically count towards your inheritance tax threshold (currently set at £325,000 for one person, or £650,000 for couples). This could potentially lower the amount of inheritance tax that needs to be paid by those named in your will. Inheritance tax can be complicated, so it’s best to read our  clear guide to inheritance tax  for more information.

2. You might need more specialist types of cover

Starting a business is a time when people look into many forms of cover, and this is one example of a time you might explore your life insurance options. For example, by taking out key-person insurance, you could protect your company against losing a star performer if they were to die unexpectedly.

3. It may be better to amend the terms of your current life policy, than buy another one

If you already have life insurance, it’s important to review your policy when your circumstances change.

Two examples could be having another child or re-mortgaging your home. To review your policy, it’s best to speak with your current insurance provider to find out any costs in making changes to your terms. Taking out a completely new policy elsewhere could be a more expensive option for you.

4. You could seek out add-ons to a single policy

When considering policy add-ons, you might think about critical illness insurance. This typically offers a lump sum pay-out upon diagnosis of a serious condition that’s listed in your policy. It is often bought as an add-on to a standard policy.

5. Two separate policies can be better than one joint deal

If you’re in a couple, you may have taken out joint life cover. This covers two lives, and typically pays out when the first person in a couple dies. At that point, the policy lapses. While there are advantages to joint life insurance, you might prefer to get two individual policies. If you were to split up with your partner during the term of your policy, you’d then have to get new cover for yourself. Given that age is a factor in determining how much life insurance costs, you could face a higher premium by applying for a new policy at a later date.

6. You may already have one policy (or more)

If you’re working and you have a benefit called ‘death in service’, then you would already have some life insurance. A pay-out under this type of policy is usually worked out as a multiple of your salary. In order for your loved ones, usually named as beneficiaries, to benefit from a lump sum pay-out, you’d need to be on your company’s payroll when you die.

If you do have death-in-service cover, it’s up to you whether you’d need further life insurance cover. Many people do choose to seek out additional protection. After all, your family may keep paying the bills and other expenses for many years after you die. If you stopped working for your employer, you will no longer be covered under a death in service benefit.

7. You could find it harder to manage extra policies

More forms to complete brings added life admin. You might forget that you were looking to find cover in the first place so that you could get on and enjoy life!


Taking the next step with life cover

A useful next step is to work out how much cover you’ll need using our simple life insurance calculator. You could look at your options by starting a comparison.

Once you’ve weighed up all your options, you should review them regularly to make sure you’re not over insured (or, more importantly, under insured).


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