Can you claim two income protection policies?

Theoretically, yes, you can take out as many income protection policies as you like. In some cases, this may prove to be pretty pointless, however, as you will be limited to receive a certain percentage (set by your insurer) of your total gross income - and this is almost definitely less than 100%! 

Purchasing an additional income protection policy can help to fill any gaps in your coverage and give you that extra bit of peace of mind. In this case, having two income protection policies can be a great idea. 

There can be implications of taking out two income protection policies, however, and it’s really important that you are aware of these and how attempting to cover 100% of your earnings can be problematic.

The limitations of having two income protection policies

Insurers will only allow you to receive a certain proportion of your earnings whilst you are out of work with injury and illness. After all, if you are just as well-off financially out of work as you were in work, what’s the incentive to recover and get back out there? 

Let’s say that you have two income protection policies. They each individually cover 50% of your income. If the insurer’s maximum limit that you can receive is set at 50%, then only one of these policies is going to pay out. This could be a blow if you weren’t aware of this and then realised that the money you’ve been paying in premiums for the second policy was a waste.

There are exceptions to this, however. Let’s say that you have two income protection policies, each individually covering 25% of your salary. Because the insurers in question have a maximum limit set at 50%, you would be able to claim on both your policies and receive pay-outs. Basically, it’s all about the total level of cover, as opposed to the number of policies.

Ok, so how much can an income protection policy cover?

When you take out an income protection policy, you can decide how much of your income it covers - but there will be a limit to this. Generally, the maximum amount you will be able to cover sits between 50-70% of your gross earnings. This does, however, depend on the insurer and your level of earnings. 

If this is something you are looking for, your choice of insurers does decrease but speak to a life insurance broker such as us here at LifeSearch. We will know which insurers to turn to in order to find the cover you are after.

You can read more about income protection and how it works, here.