Multiple life insurance policies

Key takeaways

• You can legally have more than one life insurance policy in the UK

• If you have multiple policies you can receive multiple payouts

• You can name multiple beneficiaries on each life insurance policy

What is life insurance?

Life insurance is a contract between you and an insurer. You agree to pay a monthly premium and, in exchange, the insurer promises to pay a lump sum to your beneficiaries if you die while the policy is still active.

There are various types of life insurance policies, each designed to cater to different needs and circumstances.

Can you legally hold more than one life insurance policy?

Yes, you can legally hold multiple life insurance policies in the UK, and there are several scenarios where this might make sense. For instance, you might have:

• a single policy that covers your life

• a joint policy with your spouse

Business owners might also have key person insurance to safeguard their company’s future, while a policy held “in trust” can be a strategic move to minimise the inheritance tax burden for beneficiaries.

For many, a single life insurance policy may be the most straightforward and cost-effective approach. You'll need to weigh the benefits against the potential complications of managing multiple policies.

Can I have life insurance policies with different insurers?

Yes, you can hold life insurance policies with different companies.

This can be particularly useful if you have a death-in-service benefit through your employer, which may not be sufficient on its own. By diversifying, you can ensure more comprehensive cover.

Will I get multiple payouts from multiple life insurance policies?

Yes, insurers typically payout for each active policy.

However, they may refuse to pay if they find discrepancies or omissions in your health disclosures or other important details. Be transparent and keep your insurer updated on any significant life changes to ensure your policies remain valid.

What are the pros and cons of having multiple life insurance policies?

Holding multiple life insurance policies can offer tailored cover for different aspects of your life. For example, you can benefit from a variety of different policies that cover specific needs.

However, managing several policies means dealing with multiple premiums and potentially more administrative work.

Can I name multiple beneficiaries on my life insurance?

Yes, life insurance policies allow you to name multiple beneficiaries, ensuring that your payout supports everyone you wish to protect. Keep in mind that minors may need a guardian to manage the funds until they come of age.

How much life insurance cover do I need?

It depends on your individual circumstances. A life insurance calculator can help you determine how much cover you need.

What are the different types of life insurance policies?

• Level term: A fixed lump sum payout if you die within the term.

• Decreasing term: The payout decreases over time, often aligned with a mortgage or debt.

• Increasing term: The cover increases each year to keep up with inflation or changing needs.

• Whole of life insurance: This policy guarantees a payout upon death, with no end date.

• Joint life insurance: Covers two people and pays out on the first death.

Are single or joint life insurance policies better?

Joint policies can be more affordable, but they only pay out once. Single policies offer more flexibility and continue to provide cover even after one partner passes away.

Read more in our guide to single vs joint life insurance policies.

How do I find a good life insurance policy?

To find the best deal on life insurance, comparing quotes is key. With MoneySuperMarket, you can quickly compare life insurance quotes tailored to your needs. Just provide some personal details and cover requirements, and you'll get a list of options to choose from.

Life insurance is a deeply personal choice, and while having multiple policies can be advantageous in certain situations, it's not the right move for everyone. Consider your unique circumstances, consult with financial advisors, and make an informed decision that will best serve you and your loved ones. Remember, the ultimate goal is to provide financial security and peace of mind, no matter how many policies you hold.