How Many Life Insurance Policies Can I Have?
Many people worry that when they get an insurance policy that it's the only one they'll be able to have. The fact is that you can have multiple policies at any one time but it's important to look at the advantages and disadvantages of that.
There is no law against having as many life insurance policies you want but this would quickly become overly complicated with huge monthly outgoings. This can happen when you can't adapt your existing policy and it becomes out of date. You may even have multiple types of policies like term life insurance or whole life.
Why people take out multiple policies
Specific coverage – There are certain financial priorities that need to be paid following death with a funeral being the main one with many people also getting mortgage cover too. There are also other significant life costs you may want to cover such as tuition fees for your children. It can be tempting to take multiple policies out to cover specific events.
Life changes – There are plenty of things that can come in and change your financial outlook. You could get married, divorced, have more children, gain more assets, take on more financial responsibilities or have a change of a job. All of these factors could make your existing life policy not fit for purpose and force you to change it.
Don't want the penalties – Cancelling a policy can often come with high penalties and there are plenty out there that don't allow you to amend them. If your existing policy has insufficient cover then you may keep it running while then getting another policy that offers you better protection.
Work benefit – There are employers out there who may have a company life insurance scheme which you can pay into. Quite a few people would be happy to pay into such a scheme while having their existing policy running beside it.
Why multiple policies are a bad idea
It gets confusing – More policies means more paperwork, home admin, more to think about and more for your beneficiaries to do once you have passed away. It can all be a huge headache and add unwanted stress when just one policy would make your life a lot easier.
You don't need specific coverage – You may want to ensure different things are paid out for with your policy but instead of having specific policies, you can make sure that the value is able to cover everything that you want it too. Having one high-value policy can be better than having several smaller ones.
Premiums add up – Each life policy is going to come with its own premium. These can all add up to a significant monthly output which can become quite a burden. Just having one monthly payment is going to be a lot simpler and easier to manage.
There are better options out there – There are alternatives to getting multiple policies. Before you buy life insurance you need to be sure about what solution is going to be best for you. Many people rush into obtaining life insurance before realizing it's not fit for purpose.
When multiple policies can be a good idea
While one life insurance policy can cover everything you need it to in your personal life, this may be different if you have a business to take care of. Businesses will often need life insurance guarantees that have separate beneficiaries to personal life cover. If you have an interest in a business then it's worth considering what would happen should a key member die.
If you're married then it may think it makes sense to get a joint policy but two separate policies may be a better idea. If one person dies then the policy ends and the other partner would have to get out a new policy which may then have much higher premiums. Also if a divorce were to happen, this could mean a cancellation with high fees.
Finding a better solution
Some life insurance policies are very rigid. You have to pay X amount for X cover and if you decide to cancel you will have to forfeit X amount of your policy. They don't allow for all the types of life changes that we've looked at here.
Instead of getting a new policy, it'd be a better idea to be able to review your policy and amend it if required. Before you sign up for any life insurance you need to check how flexible they can be and what, if any, costs would be charged for changing your policy.
Why Bequest is different
Bequest is such a company that realizes life change dramatically from one day to the next. They give you the flexibility that makes needing multiple life insurance policies redundant in almost all cases. With Bequest, you'll be able to amend your insurance on the go.
This will simplify your life insurance and give you the peace of mind that if anything changes in your life, your life insurance can change with it.
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