Can you have 2 life insurance policies? A Guide to Reviewing Your Financial Protection

Life doesn’t usually stand still. Moments of change, whether it’s a new job, a growing family, or a new home on the horizon, can often lead us to look at our financial plans. The arrangements you made in the past may have been suitable then, but it can be sensible to review them from time to time to see if they still align with your current circumstances.

During these life reviews, questions about existing financial products can arise. If you already have life insurance, you might find yourself wondering if it’s aligned with your present-day needs. This can lead to the question: can you have 2 life insurance policies?

At Polly, we believe in providing clear, straightforward information. The aim is to help you understand the options that could be available as you plan for your family’s financial future.

TL;DR: Is it possible to have multiple life insurance policies?

Yes, in the UK it is generally possible to have more than one life insurance policy. Each policy functions as a separate contract, and you can hold different policies with different insurance providers to cover various needs. For example, one policy could be designed to help cover a mortgage, while a second policy might be intended to leave a separate lump sum for your family. When applying for a new policy, it can be very important to disclose any existing cover you have.

What are some reasons people consider more than one policy?

A single life insurance policy can be a helpful part of a financial protection plan. However, as life changes, your financial responsibilities might change too. Reviewing your cover is one way to assess if your financial protection is keeping pace with your life.

Here are a few examples of life events that might prompt someone to review their life insurance arrangements:

• Welcoming a child: For many parents, a key consideration can be providing for their children financially until they become independent. Some people in this situation explore taking out a life insurance policy specifically aimed at helping to protect their children’s financial future.
• Buying a home: A mortgage is often a significant financial commitment. Some homeowners take out a specific type of policy to help protect this debt, which could be held alongside a separate policy intended for family living costs.
• Becoming self-employed: If you work for yourself, you might not have access to the ‘death in service’ benefits that are often provided by an employer. A personal life insurance policy can be one way to help create a financial safety net for your family in the absence of this type of workplace benefit.
• Career progression or salary changes: A significant change in your income could mean your family’s lifestyle adjusts accordingly. You might want to review your cover to see if it’s still aligned with your household’s outgoings.

In these types of scenarios, taking out an additional policy is one potential route to explore.

How might having multiple policies work in practice?

Holding more than one life insurance policy is typically a straightforward concept. You can apply for as many policies as you feel you need, as long as the premiums are affordable for you and an insurer agrees to provide the cover.

• Each policy is a separate contract: A policy with one provider is a separate legal agreement from a policy held with another. Each will have its own premium and its own set of terms and conditions, which are important to read and understand.
• The importance of honest disclosure: When you fill out an application for life insurance, the form will typically ask if you have any other policies in place. It is important to provide accurate information, as withholding details could have serious consequences and potentially affect a future claim.

Combining different types of financial protection

Thinking about your financial protection isn’t just about a total sum, but also how it’s structured. Different types of life insurance are designed for different goals.

• Term Life Insurance: This is a common form of financial protection, designed to run for a fixed period (the ‘term’). To help with understanding, there are generally three types you might come across: ‘level term’, where the cover amount stays the same; ‘decreasing term’, where the cover amount reduces over time, often used for mortgages; and ‘increasing term’, where the cover increases over time. The Family Protection we offer at Polly is a type of level term life insurance.
• Death in Service Benefits: This is a benefit some employers offer, which pays out a lump sum if you pass away while on the payroll. This can be a valuable workplace perk, but the cover is usually tied to your employment. For this reason, some people choose to have their own personal life insurance policy, which is not linked to their employment status.
• Joint vs. Single Policies: You might hear about joint life insurance, which covers two people but is usually set up to pay out only once, typically after the first person passes away. The policy then ends, which would leave the surviving partner without that specific cover. For these reasons, we do not offer joint policies as we want all policy holders to benefit from a policy payout to their loved ones.

What you might want to consider

If you are reviewing your financial protection, here are a few points it can be helpful to think about:

• Affordability: You may want to consider whether the combined total of the monthly premiums for all policies is manageable within your household budget, not just today but for the full term of the policies.
• Nominating your beneficiaries: You might come across the term ‘placing a policy in trust’, which is a legal arrangement to help direct who receives the money from a payout. This can sometimes be a complex process. A more straightforward step can be to use the ‘beneficiary nomination service’ that insurers like us provide, which allows you to name the people you would want to receive the payout.

Understanding the options available can be a key part of making an informed decision. The fact that you can have more than one life insurance policy is one piece of that puzzle, which could help you structure a financial plan that feels right for you and the people you care about.