Can you take out more than one life insurance policy to protect your loved ones?

Life insurance is a crucial financial safety net that provides peace of mind for you and your loved ones. But what if one policy isn’t enough? Can you take out more than one life insurance? The short answer is yes, but there are several factors to consider.

Types of life insurance policies 

Before considering the reasons for multiple policies, it is important to understand the different types of life insurance available:

  • Term life Insurance – Provides coverage for a fixed term, such as 25 years.
  • Joint life insurance – Covers two people and ends upon the first death.
  • Critical illness cover – Pays out if the policyholder is diagnosed with a critical illness.
  • Whole-of-life cover – Provides coverage for the entire lifetime of the policyholder.
  • Death-in-service benefit – Offered by employers, it pays a lump sum based on the annual gross salary if the employee dies while in service.

Why consider multiple policies?

Having more than one life insurance policy can serve various purposes:

  • Supplementing employer policies – If your employer offers a death-in-service benefit, you might want additional coverage.
  • Supplementing joint policies – Joint policies end up on the first death, but you may want coverage to continue for the surviving partner.
  • Meeting financial goals – Different policies can be tailored to meet specific financial objectives.
  • Changing circumstances – Life events like marriage or having another child may mean needing additional coverage.
  • Tax planning – Whole-of-life policies can be used for Inheritance Tax (IHT) planning.

Are there limits?

While there is generally no limit to the number of policies you can hold, insurers may cap the total payout.

Typically, this cap ranges from £5 million to £15 million depending on the provider. Insurers will also assess whether the coverage is proportionate to your needs.

What to know before buying additional policies

If you’re considering multiple policies, be prepared for:

  • Disclosure of existing policies – You’ll need to inform insurers about any policies you already hold.
  • Proof of income and assets – For higher-value policies, you may need to provide additional financial documents.
  • Medical underwriting – Additional medical checks may be required, depending on the policy.

Before taking out another policy, check if your existing insurer can amend your current coverage. This could be a quicker and potentially cheaper option.

While it’s possible to have more than one life insurance policy, considerations must be made surrounding the benefits against the complexities involved.

If you would like more support with deciding about life insurance policies, please contact us today.

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Posted in IFA News.