Can you have more than one life insurance policy?

When it comes to protecting your loved ones, life insurance is a vital part of any financial plan. But perhaps you’re wondering: can you take out more than one policy? The short answer is yes, but it’s worth understanding why someone might do this and what the different options look like.

One common approach you’ll likely come across is joint life insurance, which can be especially useful for couples or people sharing financial responsibilities.

Life insurance is designed to pay out a sum of money to your beneficiaries if you pass away. The purpose is simple: it helps provide financial security for the people you care about, whether that’s covering a mortgage, paying off debts, or ensuring children and other dependents are supported.

There are two main types of life insurance policies: term life insurance and whole life insurance. Each works differently and suits different needs.

Term life insurance covers you for a set period, often 5-50 years. You choose both the length of time and the amount of cover, and the policy will end at the conclusion of the agreed term.

Because cover is limited to a specific period, term life insurance is generally the most affordable option. It’s ideal for temporary responsibilities, such as paying off a mortgage or providing for children until they are financially independent.

Whole life insurance, on the other hand, runs from the start of the policy until you pass away, whenever that may be. The payout is guaranteed, provided you keep up with your premium payments, which makes it more expensive than term cover.

It’s often chosen for long-term financial planning, such as covering inheritance tax or leaving a lump sum for loved ones. It can offer peace of mind, knowing your beneficiaries will receive a payout regardless of when you die.

Joint life insurance is a single policy that covers two people, typically partners or spouses. It’s one of the most common types of life insurance and can simplify financial planning for couples who share responsibilities like mortgages, loans, or household expenses.

There are two main types of joint policies:

As the name suggests, the payout is made when the first person named on the policy dies. After the payout, the policy ends. This is particularly useful if the goal is to protect a surviving partner, for example, by helping them pay off a mortgage or manage day-to-day living costs.

Less common than first-to-die, second-to-die policies pay out only after both policyholders have passed away. These are usually considered for estate planning purposes, such as covering inheritance tax liabilities, rather than immediate financial protection.

It’s possible to have multiple policies. Some people combine a joint policy with individual life insurance, depending on their needs. For example:

Having multiple policies can also offer more flexibility. For example, if one partner develops a health issue, individual policies allow each person to adjust cover without affecting the other. It can also make managing claims simpler, since each policy has its own terms and payout.

Joint cover is appealing to many couples because it’s straightforward and can sometimes be cheaper than two separate policies. It also makes financial planning simpler. One premium, one policy term, and a clear payout structure.

It works well for couples who manage their finances side by side, particularly if you:

● Share a mortgage or other significant financial commitments.

● Want to ensure that a surviving partner has funds available quickly.

● Prefer a simple, single policy rather than managing multiple plans.

However, it isn’t always the right solution for everyone. If you and your partner have different medical histories, or if one person wants additional personal protection, individual policies can offer more control.

Choosing between a joint policy, single policies, or a combination of both comes down to your personal and financial situation. Think about:

A professional adviser can help you weigh the pros and cons and make a decision that suits both your short-term and long-term needs.

Applying for life insurance doesn’t need to be complicated. Once you have an idea of what you need, gather some basic health and lifestyle information for both partners. This will make it easier to get accurate quotes and compare your options.

If you’re unsure which type of cover is right for you, a life insurance adviser like Cavendish Online, can guide you through the choices and help you make an informed decision.