Can you have multiple life insurance policies?

Can you have multiple life insurance policies?

19 Jan 2021

Believe it or not, yes - it is entirely possible to have multiple life insurance policies..

If you already have a life insurance policy, you may not have ever considered the possibility or the need for a second policy. However, there are instances where it could be beneficial. It’s not always a case of the more policies the better, however if you’re after truly comprehensive cover then having two or maybe even three under your belt could be a good thing. 

Should I have multiple life insurance policies?

This will depend on your individual circumstances. Whilst it may make sense for you to have multiple life insurance policies, we would always recommend that you first explore the possibility of amending the terms of your current life insurance policy to meet your needs. This may solve your problems, and means you’ll avoid having to take out a totally new policy with another provider, which could work out as a more expensive option.

You can sometimes increase the amount of cover you currently have and you can also often choose additional cover, such as critical illness cover or income protection. You may find that simply making a few changes to your existing policy is enough. If not though, you may need to explore taking out another insurance policy. Let’s take a look at the reasons why you might be interested in having other life insurance policies.

Life insurance for couples

Life insurance gains a whole new meaning when you bring children into the world. Suddenly, you’ll go to any lengths necessary to protect these new little lives and quite often, this can start with getting life insurance cover to make sure they’ll be looked after when you’re not around. As parents, you will likely choose between joint life insurance, or covering one or each parent individually, and there’s also Family Income Benefit, which pays a monthly tax-free payment rather than a lump sum.

Joint policies cover two lives and typically pays out when the first person in a couple passes away. At this point, the policy lapses. For this reason, two single life policies may offer much better value. It’s not a pleasant thought, but if both parents were to pass away within their policy terms, that’s double the payout to your beneficiaries. Of course, money won’t bring you back but it can provide a much-needed financial safety net for your children in a really difficult time. It’s one less thing for them to worry about. Although, 2 separate policies may mean slightly higher monthly premiums - not always a huge difference, and we can guide you through your options.

It’s also worth noting that if you were to split up with your partner during the term of a joint policy, then you’d possibly need to take out new cover for yourself. Given that your age is a factor in determining the cost of your life insurance premiums, you could face more expenses by applying for a new policy later in life. In this way, it’s a good idea to have your own life insurance policy from the get-go.

Writing a policy in ‘trust’

Perhaps you have an existing life insurance policy that is not written in ‘trust’. You could talk to your insurer about getting that sorted, or any additional Life Insurance policy that you take out could also be written in ‘trust’. This means that any payout is kept separate from your estate - the money, property and possessions you’ll leave behind. People opt to write a life insurance policy in trust because it doesn’t typically count towards your inheritance tax threshold, which is currently set at £325,000 for an individual and £650,000 for couples. The idea is that it potentially lowers the amount of inheritance tax that needs to be paid by your beneficiaries, and crucially, it means your loved ones can get access to the funds quicker - compared to going through the usual probate process. 

If you don’t want to purchase a second life insurance policy to do this, you can put your existing policy into a trust. This is something we at LifeSearch can help you with. Find out more about putting your policy in trust.

Life insurance for your business

Perhaps you are after more specialist types of cover, and your standard life insurance policy doesn’t quite meet those needs. This can commonly be the case if you’ve recently started your own business and you’re looking to explore business protection

Business protection refers to a group of products that are designed to help keep a business afloat in the event of death or illness. Business protection allows you to protect your key people with key-person insurance, ensures business continuity, covers and protects business loans, and allows you to set up cover in a tax efficient way. You may also want to offer your employees life insurance benefits, such as death in service. 

No one’s circumstances stay the same forever, so it’s natural that you may need different things from your life insurance policy over the years. If you can afford to pay a little more in premiums and you don’t mind taking on the extra admin, then taking out another life insurance policy could be really beneficial. It’s not the only option though, so make sure you also look at how you can make your current policy work better for you.

Need some advice? We’re here for you! Give our expert, award-winning team a call on 0800 316 7253, or contact us here, and we’ll guide you through your options.


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