Many people worry that when they get an insurance policy that it’s the only one they’ll ever be able to have.
Not true 🙅🏽
Believe it or not, you can have multiple policies at any one time 😲
Let’s take a look at some advantages and disadvantages of having more than one policy.
Why people might take out multiple policies
Specific coverage – There are certain financial responsibilities that need to be paid following a death. A funeral, mortgage, or tuition are a few of these responsibilities. It can be tempting to take multiple policies out based on what insurance you’re looking for.
Life changes – There are plenty of things that can come and go, changing your financial situation. You could get married, divorced, have more children, gain more assets, take on more financial responsibilities, or have a change of job. All of these factors could cause your existing life policy to not fit your lifestyle and force you to change it.
High penalties – As many companies do not let you amend your policy (we do! 👏), canceling a policy can often come with high penalties. However, if your existing policy has insufficient cover, you can keep it running while you look for another policy that offers you better protection.
Work benefits – There are employers out there who may have a company life insurance scheme which you can pay into. You may also be happy to pay into an outside existing policy along with the company scheme.
Why multiple policies can be tricky
It can be confusing – More policies means more paperwork, more to think about, and possibly more for your beneficiaries to do when you pass away. It could be a headache and add unwanted stress if just one policy would do.
You don’t need specific coverage – You may want to ensure different aspects of life are paid out with your policy. But instead of having various specific policies, you can make sure that the value is able to cover everything you want it to. In some situations, having one high-value policy could be better than having several smaller ones.
Premiums add up – Each life policy is going to come with its own premiums. These can all add up to a significant monthly amount, which could be more than your budget allows. Having one monthly payment can be simpler and easier to manage.
When multiple policies can be a good idea
While one life insurance policy tends to cover everything you need it to in your personal life, this may be different if you have a business. Businesses will often need life insurance guarantees that have separate beneficiaries to personal life cover. This is worth considering to keep your company secure.
Also, if you're trying to build financial stability and wellness for your loved ones, it can be helpful to have more than one policy. Also, if you’re married, having more than one policy can make sense. Single policies are normally the best bet. This is because with one joint policy, if one partner dies, the policy ends and the other partner would have to get a new policy which may then have much higher premiums. Also, in case of divorce, 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 discussed here.
Instead of getting a new policy, it’d be a better idea to review your policy and amend it if required. Before you sign up for 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
As a company, we realise that life changes dramatically from one day to the next. We give you the flexibility to amend your insurance policy when you you need to - when you get a mortgage, have children, get married etc.
This will simplify both your life and insurance. It also gives you peace of mind that if anything changes in your life, your life insurance can change with it.