Life Insurance - Linked to Mortgage and Stand Alone

Prophet79

This is more of a question.

When my first child was born I decided it was time to get life insurance.  The type I have would provide a payout to my (soon to be) wife and children should I die, but also provide an income should I be so ill that I was unable to work.

A couple of years later after we were married, my wife re-mortgaged and added me to it, and with the mortgage came cover that would fully pay off said mortgage should one of us die.
My wife is now telling me that I can't have two seperate life insurance policies, and I need to cancel my individual cover.

She is usually right about all things financial as she has had mortgages since her early 20's, but a quick google search says that multiple cover is allowed, so now I'm not sure and am here asking for advice.

Thanks

Nearlyold

You can have as many life insurance policies on your own life as you like and can afford. 

Your wife may be thinking of house/car etc insurance where it would make no sense to have two policies covering the same risk as in the event of a claim for a car written off worth £10,000 you could only get a payout of £10,000 in total, you wouldn't get a payout of £10,000 from each insurer. 

With life insurance in the event of a claim each insurer would pay out the amount they've insured you for.

DullGreyGuy

Prophet79 said:

This is more of a question.

When my first child was born I decided it was time to get life insurance.  The type I have would provide a payout to my (soon to be) wife and children should I die, but also provide an income should I be so ill that I was unable to work.

A couple of years later after we were married, my wife re-mortgaged and added me to it, and with the mortgage came cover that would fully pay off said mortgage should one of us die.
My wife is now telling me that I can't have two seperate life insurance policies, and I need to cancel my individual cover.

She is usually right about all things financial as she has had mortgages since her early 20's, but a quick google search says that multiple cover is allowed, so now I'm not sure and am here asking for advice.

Thanks

So at the moment you have a life insurance with critical illness and a second joint/death of first life decreasing life insurance. 

You can have multiple policies or can have multiple policies with multiple sections. As long as at the time of buying you have a legitimate insurable interest its all good and for Life insurance its very easy to show your widow/kids will need monies upon your death to give that interest. Unlike other classes of insurance it doesn't matter if that interest still exists at point of claim or not. 

So on this occasion she is wrong, you can have multiple policies. 


On a side note I would make sure you understand your standalone policy properly given you state it will provide. an income if you are unable to work... my assumption would be that it is a Critical Illness policy which is frequently linked to Life insurance. It is not really an income replacement product, it pays simply a lump sum if you contract one of the specified illnesses to the specified severity. There are many other illnesses that can result in long term time off work that won't be covered by CI which would leave a gap in your plans. 

The full fat option is to buy Permanent Health Insurance which is a true income replacement product and covers for any condition (as long as not explicitly excluded) causing you not to be fit to work. It makes monthly payments for as long as you are off sick until your declared retirement age. 

The one benefit of CI is its a lump sum if you hit the requirements, so if you are nearing retirement and say get diagnosed with cancer which you fortunately can be treated for you may decide to go part time or not return to work whereas PHI would stop paying once the doctor says you are fit to return to work.  You can have both which could be useful for example if you are still young, become disabled but are fit and want to continue working after recovery. The CI can fund making modifications to the home to deal with your disability and PHI cover your normal income whilst recovering.