Upgrading mortgage cover on life insurance

lea2012

Hi

We have a life insurance policy with Legal and General. We're 8 years into a 20 year policy. 

The policy includes mortgage cover for the initial amount we paid on the house. We bought a doer-upper and remortgaged 2 years ago to release equity to build an extension, adding around £50k to our mortgage. 
We didn't think about the life insurance and changing the mortgage amount until recently as we totally forgot. L&G have advised we can't amend our existing policy, but we can take out an additional policy to cover the remaining mortgage amount if we wish. I'm clueless when it comes to life insurance / mortgage cover but they have said they can't offer any advise as that would appear biased, although they can put me in contact with one of their independent advisors if I wish for further advice. I'm not sure it would be entirely independent if they recommend so I'll ask here instead:

Can we have two life insurance policies running side by side? Should the worst happen, can you claim from both? 

If we have life insurance, would I be better to keep this policy and purchase an additional mortgage insurance policy instead rather than more life insurance? 

Are there any benefits to scrapping our existing policy all together and starting afresh? If you live the full 20 years of your policy can you draw down any funds, or extend the policy at all? 

As you can see I'm not greatly knowledgeable on the subject and as this is our first mortgage it was all rather new to us at the time so any help would be appreciated. 

Thanks 

Sandtree

Many people either have multiple policies or policies with multiple sections because they have different needs... for example you may have a decreasing term that is there to cover the mortgage but an index linked sum that is to provide 10 years worth of lost wages to their partner on their death.

Life insurance is the same as any other insurance, you get a payout if the insured event happens within the term of the policy and nothing if the event doesnt happen. Historically there were hybrid investment and insurance products however these were seen as poor value and they were withdrawn a long time ago leaving people able to buy cheaper insurance and a separate investment product if they wanted one. 

Often it will be cheaper to buy a second policy than cancel the first and buy a larger one as being several years older premiums will be higher but no harm in getting comparative quotes of a secondary policy -v- a new policy covering the full amount.

lea2012

Thank you for you reply. 
I'll look into a second policy today and get one purchased to cover the remaining amount. I just wanted to make sure this was an option and that it wasn't incorrect to do this and seems its perfectly normal so I feel much better now. Thanks. 

dunstonh

We have a client with about 9 life assurance plans, the last time I looked.   Its perfectly fine and normal to have multiple plans covering multiple needs.  One plan/segment is rarely suitable for most people.   This is why many modern plans allow multiple segments within them as it allows for cover for different needs.

they can put me in contact with one of their independent advisors if I wish for further advice. I'm not sure it would be entirely independent if they recommend so I'll ask here instead:

An independent is independent.   However, if they are not independent then they will not be independent.  That sounds like it is stating the obvious but L&G do not employ independent advisers.  So, there is some inconsistency in information there.