As time passes circumstances change. Perhaps you now own a home, have a higher paying job, or find your health slightly deteriorating. All these changes can have a significant impact on whether you feel your current life insurance policy is sufficient.
So is it worthwhile taking out another policy? Below we explain how many life insurance policies you can hold and whether reviewing your current level of cover is better instead.
Yes, you can take out more than one life insurance policy if you think it's necessary. While there's no legal limit to the number of plans you can hold, there are certain providers who will cap the level of cover they're prepared to offer. This is why we can't categorically say you can purchase as many life insurance policies as you wish.
You can also take out a life insurance policy with multiple providers, but before doing so it's best to evaluate if that's the right approach for you.
In other situations, it might be easier and cheaper to update your policy with your existing provider. Remember, the older you become the risk you carry increases, which means your insurer will charge a higher premium. It's always best to look at the total cost of updating your policy beside what it would cost to take out a new plan.
There are several factors which might make you want to take out another life insurance policy. However, it's important to note that even if these listed issues affect you it might still be better to renew your current insurance.
If you've received successive promotions since taking out your life insurance policy, you might find that your current level of cover is insufficient for your family’s new lifestyle. As such, it may be worth taking out an additional policy so there are two plans to claim against.
If you've written your life insurance into a trust, and therefore earmarked it for a particular beneficiary, you could buy another life insurance policy for greater flexibility. Again, it's best to speak to a tax specialist to see if this is the best course of action for you. For more information on trusts, read the guide written by our preferred tax advisers Kellands Hale.
If you have a foot on the property ladder then you might want additional cover for your mortgage payments. This is to ensure that your beneficiaries still get the inheritance you intended if you were to die before your mortgage is paid in full.
If you've started a business and are thinking of taking out another life insurance policy to protect it, it's worth noting that there are other types of insurance which are more appropriate.
For example, you could consider Shareholder protection. This cover ensures your beneficiaries are left with the cash value of your shares instead of taking over the day-to-day running of the business. More information on this type of policy, and where to purchase one, can be found in our guide.
Other insurances which may be of interest include:
If you'd like to buy one of these policies, speak to our preferred partners Watts Mortgage and Wealth Management.
Taking out more than one life insurance policy might mean you hold a more comprehensive level of cover. Consider an example where your employer provides you with life insurance as a benefit. This cover might be basic and therefore taking out a separate policy might make you feel more at ease.
In addition, having multiple life insurance policies means it can also be easier to divide up a planned inheritance after your death. Instead of one payout on your death, separate payouts to different people can carry less ambiguity on how to divide your estate.
Having multiple policies is not right for everyone. Multiple policies mean multiple premiums, which means the overall cost of your insurance can increase. Therefore it's important to see if your insurer can increase the limit of your current policy, as it can be the cheaper option. That's why it's best to speak to your independent financial adviser on what the best course of action is for you.
Unsure if multiple insurance policies are right for you? Then it's best to speak to your financial adviser.
If you don’t have a financial adviser then consider our preferred partners, LifeSearch. At Lifesearch you can gain access to qualified insurance brokers who advise on a full range of products which include life insurance, critical illness insurance and income protection.
Get in touch with one of their advisers by clicking here.
Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.