Can you have more than one life insurance policy?

How many life insurance policies can you have?

It is perfectly legal for people to have more than one life insurance policy in place at the same time.

You might have more than one policy as an individual or have joint life insurance with a partner. You can have a joint life insurance policy and a single life insurance policy at the same time.

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Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of an insurer before committing to any financial products.

Why would you get more than one life insurance policy?

There are many reasons why you might need more than one life insurance policy in place at the same time:

• Cover your mortgage: If you have a repayment mortgage, consider decreasing term life insurance. The payout falls as your mortgage balance decreases.
• Protect your family’s income: You can choose a lump sum or a regular replacement income with family income benefit if you die during the policy term.
• Review your cover when things change: Marriage, having children or taking on more debt could mean you need extra cover or a new policy. 

Benefits of having more than one life insurance policy

There are many circumstances when having more than one life insurance policy can be beneficial. 

The earlier in your life that you take out life insurance, the cheaper it will be. So if you need to increase your sum insured later, you might be better off taking a second policy out, rather than cancelling and buying a completely new policy.

For example, if you take out a 25-year decreasing term policy to match your 25-year mortgage and then, 10 years later, borrow some extra to build an extension. 

You might leave your existing policy in place and buy a 15-year decreasing term policy to match the additional borrowing. 

That 15-year policy might be more expensive than your original policy because you are older or have developed a medical condition that increases the risk of you dying early. Premiums are based on your age, the medical information you and your doctor provide, plus your lifestyle.

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Multiple policies for families

Families often have more than one policy in place serving different purposes – for instance paying off a mortgage and providing income to live on.

You may need additional life insurance if your family grows or your circumstances change. 

For some people that will mean cancelling an existing policy and buying a new one, but for many it could be better to buy additional life insurance. If you are replacing an old policy, never cancel it until the new policy is in place.

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Downsides of multiple life insurance policies

Be careful not to take out more life insurance than you actually need. 

Make sure any new life insurance policies you take out are going to be affordable in the long-run. There is no cashback value to most life insurance policies so if you have to stop paying it later because you cannot afford it, that will be lost money. 

Life insurers also have limits for how much they are prepared to be exposed to particular risks so may not offer you the full amount of life cover you want. 

You may need to split the total you require between two or more life insurers.

Because life insurance is more expensive the older you are when you take it out, it may be cheaper to continue the initial policy you took out years ago and buy additional cover at the new, higher rates now that you are older.

There are no rights and wrongs on this. You may find you can get a competitive quote to replace your old policy, or several policies, with a single new life insurance product. 

It may be best to seek professional advice from a specialist life insurance broker.

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Life insurance FAQs

Can you have multiple life insurances with the same company?

You can have more than one life insurance policy with the same company or with different providers. 

Either way, you must declare to all involved how much life insurance you are seeking in total – to make sure you are not over insured or that one insurer has gone above their internal limits per customer.

Can you claim life insurance from two different companies?

If you have separate policies with different companies then both, or all, should pay out if you die within the term of those policies.

Life insurance does not incur tax, but would be added to the value of your estate so may then be subject to inheritance tax. 

However, you can set up life insurance in advance to have it paid into trust to avoid this.

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Do you need to tell your insurer about other policies?

You must inform your existing insurer if you take out a second life insurance policy either with them or another provider. 

Also tell your potential insurer if you are applying for more than one policy in one go. Insurers need to know the total amount of life insurance you are applying to have in place.

However, don't over insure yourself for such large sums that your family would be significantly wealthier in the event of your death. If you are single with a £200,000 mortgage, you don’t need £1m of life insurance and that would raise suspicions.

Even if the total you are applying for is reasonable for your circumstances, each insurer will have a maximum amount (sum insured) that it is prepared to risk per customer with your risk profile.

Insurers don’t want all their eggs in one basket. That may mean it could not offer you all the life insurance you need but would be happy to cover, say, half of it.

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What are the alternatives to taking out multiple life insurance policies?

You can buy a completely new life insurance policy and cancel your current policy – but never cancel a policy until the new cover is in place. 

Or you may be able speak to your existing life insurer about increasing the sum insured.

But do your sums first. Do you really need the extra life insurance? 

You may find you have other savings or investments that could be used by your family in the event of you dying, or work benefits. These may be enough to mean you do not need additional life insurance. 

Or your family may have become self-sufficient and be less reliant on you funding them in the future.

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