There are a variety of reasons why you might want to take out more than one life insurance policy, but the question, is can you? Well, the simple answer is yes, you can, but there are some restrictions that you’ll need to be aware of – the first being that you can’t insure the same thing twice or one simply won’t pay out.
In this article we look at why you might need extra cover and what you need to keep an eye out for when you do. So, whether you’re looking to cover your mortgage or protect your family a lump sum after death, this is information you need to know.
Whilst you can take out more than one life insurance policy, the insurer/s used will arbitrarily employ a reinsurer to assess and manage their exposure to risk. So, even if you don’t disclose an existing life insurance policy when you apply, the chances that they’ll find them during their own checks are very high. They’ll also know, as mentioned above, whether you’re trying to insurance the same thing more than once – which you can’t do.
Should you then not be able to explain why you didn’t mention it or come up with a valid reason for needing extra life insurance cover, your motives will likely be questioned. This could lead to your application for a new life insurance policy being rejected – so if you don’t want to waste your own time and theirs – it’s best to be honest.
Why Might You Need More Than One Policy?
As people go through their lives, it’s quite normal for life insurance policies to be reviewed as priorities change. The majority of people will take out their first policy at the same time as their first mortgage, so that their partner is financially covered in the event that they pass away prematurely.
Reasons why you might need to look at take out a 2nd life insurance policy include:
● Having children
● Starting up a business
● To cover additional assets
Essentially, you need to be able to cover yourself and your family against the worst happening and as the parameters of your life change, so must your life insurance cover or you could find that your loved ones aren’t quite as protected as you want them to be.
It’s good practice to revisit your life insurance cover on a regular basis, as staying with the same policy forever could mean that you might not be getting value for money. The same goes for any type of insurance, which is evidenced by this BBC article from 2019.
Can’t I Simply Amend My Existing Life insurance Policy?
Sure, it may be possible to change the conditions of your existing life insurance, however, it’s not guaranteed that your insurer will allow it. That said, it might actually suit you better to take out an additional policy depending on your circumstances.
The right or wrong answers in this particular scenario will depend very much on your own personal circumstances, which is why it’s a very good idea to talk to an insurance professional before making any decisions. They’ll be able to use their industry expertise to analyse your situation and advise you on the correct course of action. They’ll also be able to tell you about important things like putting life insurance into a trust that could save you thousands in inheritance tax.
Talk to the Experts
Your biggest takeaway from reading this blog should be that while it is possible to take out more than one life insurance policy, it’s not a particularly good idea to do so without checking with a) your current insurer and b) a reputable financial advisor. That’s because you could otherwise think you’re fully covered when you’re not – potentially leaving your beneficiaries majorly out of pocket.
If you’d like to know more about anything discussed here or you’re interested in leading a more-savvy financial life, head over to our website www.bemoneysavvy.co.uk and take a look around. There you’ll find out lots of information on planning for your financial future.
Alternatively, if you’re looking for competitively-priced home or life insurance, give us a call on 0161 537 0555 and we’ll do our utmost to find the perfect policy for your needs.