Can You Have More Than One Life Insurance Policy?
A question I am frequently asked is “Can you have more than one life insurance policy?”. The answer is yes – you can, and most people inadvertently do have multiple policies if you have more than one super fund.
Most super funds will provide you with a default amount of insurance, which they charge you for, so it’s important to know what insurance you have and what it is costing you. It is often more cost effective to only have one insurance policy (and only one super fund), as insurers provide discounts for larger sums insured.
You do need to be careful though. If you already have an insurance policy and are wanting to apply for another one, you will need to let the new insurance company know of the existing policy. They will ask if you are keeping it and you need to be honest. If you say you are going to cancel the existing policy, and you don’t, then the new insurance company could reduce the payout to you by the value of the first policy!
There is a limit to the amount of life insurance you can take out and it is typically based on a multiple of your income, and your age. For example, if you are earning $250,000 and are under 40 then the maximum sum insured would be $10m. This would reduce to $3.75m if you were aged between 51 and 55.