More than one life insurance policy

Much like retirement, pensions, and funeral arrangements, life insurance is something many people will put to the back of their minds as something to think about at a later date.

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Much like retirement, pensions, and funeral arrangements, life insurance is something many people will put to the back of their minds as something to think about at a later date.

However, if you’ve reached a certain point in your life when living expenses, mortgage payments, dependents and other responsibilities are a lot greater than what they once were, it might be prudent to consider making plans for the future, including purchasing life insurance.

Life insurance pays out a financial sum upon your death, meaning your dependents and loved ones who might otherwise be left with associated costs and bills will have some peace of mind here.

Most life insurance policies will have a maximum payout, which for some policyholders will not be enough to meet the financial needs of beneficiaries upon their passing.

That being the case, is it possible to have more than one life insurance policy?

Are you Allowed to Have Multiple Life Insurance Policies?

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For many insurance policies out there, the case for having more than one of the same policy is not possible.

This is because by law, you can only claim for the amount of money that you have an “insurable interest” over, nothing more than that.

An insurable interest is “when a person derives a financial benefit from the continuous existence, without repair or damage of the insured object.”

In layman’s terms, the policyholder stands to suffer a financial loss if the insured subject is lost or damaged.

Let’s say you have a car worth £10,000: you stand to lose £10,000 if it gets stolen. In that event, you would be able to claim £10,000 from your car insurer.

However, you cannot take out two car insurance policies and get a payment of £20,000 in that scenario, since you would be getting more money than your original insurable interest.

This is important because otherwise people could be tempted to make fraudulent claims and make money off their insurance policy.

Life insurance however works slightly differently.

Because it is not a car, or a house, or a tangible insurable interest that one can place a monetary value on, it is possible to purchase more than one life insurance policy – and indeed many people do.

How Many Life Insurance Policies are you Allowed?

There is no set limit to how many life insurance policies one is allowed to purchase, so whether it’s two or more than that, you should not have any trouble purchasing more than one policy.

It is important to note however, that should you purchase a particularly high value of life insurance, you will be asked to justify why such a high payout over multiple policies is appropriate.

In many cases, high life insurance payouts have led to fraudulent or criminal cases.

If you do find yourself needing a substantial payout from life insurance, but are having trouble justifying the amount in detail, a financial advisor or independent expert would be the best person to speak to.

Why Would Someone Purchase Multiple Life Insurance Policies?

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The reason life insurance is purchased by most is because they want to be assured that when they are no longer here, their loved ones are financially protected to a certain degree in their absence.

This financial protection can be for many things: it could range from covering just funeral costs to being able to provide an economic safety-net for a time after the main-income earner has gone.

The latter being the case, most policyholders will want to secure a life insurance policy with a payout large enough to meet this greater financial need.

However, many life insurance policies come with maximum limits, and just obtaining one policy might not do the trick.

Some policies can range in payouts from £1,000 to a maximum of £10,000.

Others might see a £750,000 payout instead.

In that case, it would be pertinent to purchase more than one, paying multiple premiums but building up at the same time a nest egg for family, dependents and loved ones to use at a time when they need it most.

There are some insurance providers who do not have a specified maximum coverage amount, but usually this comes with stricter conditions and at cost.

Indeed for the amount of payout you want your beneficiaries to see (and under the terms you want) it might well be more cost effective and better to purchase multiple life insurance policies.

Another reason to purchase multiple life insurance policies would be in case one insurance provider went insolvent, or underwent a particular circumstance meaning they might have trouble paying out.

It is rare, but multiple policies with different providers both lessens and spreads the risk of that occurring to you considerably.

Can you have life insurance with more than one company?

Yes, you can have life insurance with more than one company, but as mentioned previously you will be asked firstly, if you have life insurance anywhere else, and if so how much, and then secondly, possibly asked to justify the amount you are purchasing.

Should you be looking to purchase multiple life insurance policies with the same insurer, you might have some issues, as there can be limits to the maximum coverage allowed to any one policyholder as opposed to just policy limits.

It is important to check your policy documentation carefully and speak with your provider if this is something you are thinking about doing.

Where can you buy multiple life insurance policies?

There are many places you can purchase multiple life insurance policies from.

There are price comparison websites that allow for quick and easy results on what the life insurance market is offering.

You could also acquire the services of a life insurance broker, who can create a more tailor-made policy that fits your specific requirements.

Finally you can contact potential insurance providers yourself directly, which, without other intermediaries working off commission, could result in exclusive deals unlocked only via this route.