Should I Get Another Life Insurance Policy?
With almost all insurance products, such as car, buildings & Contents, gadget or travel insurance, it is not prudent to purchase different policies to cover the same thing. This is because you will be paying up to double the premiums and coverage, without it benefiting you. With the above polices there are contribution clauses embedded into them.
Which in non-insurance language means that you will not get a higher level of pay out when you claim. If you do double down on your insurance for car, home, travel and gadget insurance. When an insurance company comes to settle a claim, they will search to see if there is dual coverage. If you there is dual liability each insurer will pay up to the maximum of 100% of the claim and not the 200% which you would have paid for.
However Life Insurance Is Different
The way Life Insurance has been created is completely different to general insurance products. Many people have taken another Life Insurance policy out due to different circumstances. To be as transparent as possible at Life Insurance Cover, we are not encouraging you to seek out multiple policies from the start. It is usually, cheaper and extremely less complicated to find one policy that meets your needs. But as a lifetime is a very long period of time, each person’s needs change over the term of a policy. In some circumstances it makes perfect financial sense to take out a new Life Insurance policy while maintaining your existing cover.
In This Guide:
Should I Take Out Another Life Insurance Policy?
Do You Need Another Life Insurance Policy?
Adjust Your Current Policy Or Take Out More?
Should I Take Out Another Life Insurance Policy?
As we get older circumstances can change dramatically which will require you to need a different level of Life Insurance cover. You may have purchased a new home with a larger mortgage or had the joy of a first child or have more children and need to protect them for the future.
With some Life Insurance policies you might be able to adjust an existing policy to increase the potential pay-out that your family will receive. But you may also find that you need to take out another policy to deliver the level of protection that you need. Another situation could be starting a new job, you might be offered a policy through your employer. In this circumstance, you might consider cancelling a policy or maintaining existing policy.
It is extremely important to keep with the premiums and paperwork, as it can quite easily become unmanageable. Taking out another Life Insurance policy makes perfect sense if you purchased them when you were younger or before developing medical conditions. It is likely be more cost-effective to maintain those initial policies and take out an additional one to top coverage. Rather than to cancel them and start a new policy with potential restrictions.
All Life Insurance policies exist independently of each other without the dual coverage limitation. You’re Family or beneficiaries will be able to claim against each individual after you pass away.
Do You Need Another Life Insurance Policy?
Ever changing life circumstances and the subsequent financial requirements may require you to increase the amount of Life Insurance you have. Or potentially extend the length of the term of your Life Insurance protection. By far the easiest and most financially sensible way to do this would be to purchase an additional policy. There are many different life situations which could require a need to increase life insurance coverage.
Situations that may need another Life Insurance policy:
Getting married
A Divorce
Birth of a child, further children or grandchildren
Buying a home with a mortgage
Re-mortgaging your home: including extending the length of your mortgage
A common situation that our customers have spoken to us about is the purchase of a Life Insurance policy following the birth of a first child and subsequently further children have been born. Which means you might find the sum insured is no longer enough to provide for your larger family. You might wish to increase your Life Insurance coverage to support of all your children after your death. Another common situation is divorce, in which you become a single parent and need to increase your Life Insurance to protect your children.
Extending the term of your policy if you buy a new home and take out a further 25-year mortgage or have another child. If you are not able to extend the term of a current Life Insurance policy, you might need to take out another Life Insurance policy. Usually speaking it will be generally be cheaper to do so while you are younger. Rather than waiting until the current Life Insurance policy expires. As you will be older and possibly less healthy and could face much higher insurance premiums.
Adjust Your Current Policy Or Take Out More?
At Life Insurance Cover we suggest talking to your current Life Insurance provider prior to seeking out another Life Insurance policy. You are able to ask them if you can adjust your current policy, either increasing the sum insured or term extension. If you are unsure on how to approach your provider, simply call Life Insurance Cover and we will help you.
After making adjustments to your policy, the premiums will increase. But it could work out to be cheaper than taking out an additional policy. If the costs of adjusting a current policy are more expensive than taking out a new policy, simply get a no obligation Life Insurance quote from Life Insurance Cover. The best way to save money is to always compare Life Insurance quotes and we will help you do it.
Should I Cancel My Existing Life Insurance Policy?
For almost all people a policy which was purchased earlier in life will be cheaper than the one you could buy later on in life. At life Insurance Cover we review our visitors existing cover and rarely advise against cancelling an existing policy. However there are exceptions, which include premium cost, medical history. If an individual has purchased a policy in the past and the circumstances have not changed, but the premium costs were higher. We may suggest a new policy to replace it. Generally speaking it is more cost-effective to adjust a current policy if possible. Or top up the sum insured or the term length with another life policy.
However if your Life Insurance needs have changed dramatically since you initially purchased Life Insurance. Keeping the previous policy might not be effective protection for you. If you have made changes which improve your health and lifestyle since you first secured insurance. Maybe quit smoking, lost weight, or changed your career which means you could be a lower risk to protect. You might find lower premiums now, even with a few more years’ life experience.
Life Insurance Benefits From Your Employer
As an employee, you may benefit from a package of employee benefits which may include death in service cover. This will provide your family and named beneficiaries with a tax-free lump sum if you pass away while employed by the company. The amount varies between companies, but usually it is between two to four times your salary.
Death in service cover is a type of Life Insurance and we have written a separate guide to cover it in greater depth. With death in service, please do not assume it will meet all your needs. It’s not uncommon for people to have to take out a separate Life Insurance policy to top up their death in service benefit. This is because a death in service benefit may not provide a large enough sum insured. Also you will lose any death in service benefit if you change jobs, made redundant, or not able to work due to illness or injury. This is very important reason to why you may want to take out another Life Insurance policy. This in turn will still protect you and your family irrespective of your employment situation.