Taking out a life insurance policy can be essential to have the peace of mind that your family will be protected if you were to die. Life insurance can ensure that your family is financially secure in the event of your death and they will not need to worry about funeral costs, paying off a mortgage or struggling financially without the benefit of your income.
You may be tempted to increase the protection that a life insurance policy can offer by taking out more than one life insurance policy. However, are there any benefits to having a few policies and can a person have multiple life insurance policies at the same time
Can a person have multiple life insurance policies?
In theory, a person can take out as many life insurance policies as they want. There is no legal limit to the number of concurrent life insurance policies that any individual can hold. It might seem like an excellent idea because taking out more than one policy could double, triple or quadruple the benefits that your family would receive. However, there is a greater degree of complexity involved in the situation as we will examine in this piece.
Why would multiple life insurance policies be necessary?
If you already hold a current life insurance policy that does not cover all the bases you want it to cover, it may be necessary to take out another policy. For example, if your mortgage would not be fully paid off under the terms of your existing policy but you have paid a significant amount of money into the policy already you might not want to cancel it. Instead, you can take out a second policy that ensures the mortgage would be fully paid.
Another reason for taking out another policy could be that it is a different type of life insurance policy. If you hold a policy under your own name but you would like to take out a joint one with your partner or spouse, this might provide the motivation for another policy. Additionally, you might find a policy that has extremely low premiums while offering excellent benefits and decide that it is worth taking out another policy in addition to your existing one.
As you progress through life, your financial goals and circumstances may change periodically. This can sometimes spark the need to take out another life insurance policy. This can also be true if you take out another policy when you experience a life change like quitting smoking. If you take out policies at regular intervals, you could end up holding several policies.
Can a person have multiple life insurance policies with different insurers?
Generally, insurers will not care about the number of different policies in your name but they may focus on the total amount that would be paid out by their company when you die. Therefore, some insurers could be slightly wary if you already hold several policies with their firm as they may need to pay out a significant sum of money in the event of your death.
Should I purchase multiple life insurance policies?
When you purchase a life insurance policy, it is not necessary to take out several at the same time. It is extremely important to check the terms of a policy to ensure that it includes all the coverage that you require at the current time.
However, naturally, life circumstances can change and you may find that you require different types of coverage or a larger sum of money to be paid out when you die. For example, if you took out a policy years ago and have since progressed in your career, the benefits offered by your original policy may not be enough to support your family in these current times. Consequently, it may be wise to take out a new policy at this point in time.
So, if you have been wondering: “can a person have multiple life insurance policies at once”, the short answer is yes. You may want to explore or evaluate whether you have the need to take out several life insurance policies and how these would be beneficial to your family and loved ones if the worst were to happen. Ultimately, the decision is yours, but taking out an extra policy or two can give you the long-term reassurance that your family is fully financially protected.
Please contact us at WIS business Protection to find out more or use the calculators on our personal protection pages.