Can I have 2 Life Insurance Policies in Australia?
Can I have 2 life insurance policies in Australia? Life insurance companies in Australia usually don’t have any limits on how many policies you can buy. But the amount of coverage must make sense, and when you fill out the following application forms, you must be clear about all the information about your current policy.
Life insurance is meant to help you and your loved ones financially if something happens to you. Some people feel at ease with just one strong life insurance policy, and getting more than one may be a good idea for some people.
Can I Have 2 Life Insurance Policies In Australia?
Yes, a person in Australia can have more than one life insurance policy, and one person can have as many life insurance policies as they want.
But people should carefully think about how much life insurance they need and read over the terms and conditions of any policy they are considering. It might be a good idea to talk to a financial advisor to determine the right amount and type of coverage for a person’s unique situation.
People with many financial responsibilities or who want to give their loved ones more financial security may want to have more than one life insurance policy. But it’s important to remember that having more than one policy can lead to higher premiums and make it harder to plan your finances.
People thinking about buying more than one life insurance policy should carefully look over the terms and conditions of each policy and consider the pros and cons of doing so. They should also ensure they have enough money to pay the premiums on more than one policy.
Can you have multiple life insurance policies?
In Australia, you can get more than one life insurance plan. For example, if you have more than one retirement account, you may already have more than one policy for life insurance. According to the Australian Taxation Office (ATO), about six million people have two or more super accounts. Moneysmart says that about 70% of life insurance policies are bought through super, and most super funds cover life insurance automatically or by default. But starting in 2020, there will be new rules that mean you may not automatically be covered by life insurance through your super, depending on how old you are and how much money you have.
You may also buy more life insurance to cover any gaps in the coverage you already have. For example, if you already have life insurance through your super, you might also want to get a policy outside of your super. For example, super funds can’t sell new trauma insurance policies anymore, so you might want to buy trauma insurance somewhere else. Also, the default amount of life insurance you can get through super may be less than what you can get outside of super, so you may want to apply for more insurance outside of super. Remember that most retirement funds will let you apply to get more coverage (offered as extra or tailored cover).
Before you apply for more life insurance, check with your current insurer to see if this will change how your current policy works. For instance, if you buy two life insurance policies from the same company, the maximum coverage amount may be used for both policies. So, your insurance company may have to cut your coverage so that you stay within the maximum limit. If this happens, your insurer will usually lower the most recent policy they gave you and give back the premiums you paid on the amount over the limit.
Can you have multiple life insurance policies on one person?
Yes, you can have multiple life insurance policies on one person. This could be a top-up policy on a group policy or another policy with more types of coverage, such as Trauma Cover. This is fine, but be aware that most income protection policies have built-in offset clauses that mean they can only cover up to 70% of your salary.
It’s important to know that each insurance company has its own rules about the maximum amount of coverage it will offer for a policy and the maximum amount of coverage a person can have across all their policies based on how much money they have.
Justification is done by showing the underwriter (the person who looks over your application) that your debts and other financial obligations (like paying for your kids’ college) minus your assets are enough to justify the total amount of insurance you already have. Even if you can pay the premiums, you still need more money to pay for a higher level of coverage.
On the insurance application, you will be asked if you already have any policies in your life. It would help if you gave an honest and correct answer to this question. If you don’t give this information, your application could be turned down, or even worse; your next claim could be turned down.
Can you have more than one policy that helps you protect your income?
Yes, you can have two policies that protect your income. But offset clauses are built into insurance that protects your income. Because you can’t be better off being disabled, the total benefit you can get from all your policies is usually capped at 75% of your income. If not, you might not want to get better and go back to work.
Still, you can have two policies protecting your income with the same waiting and benefit periods. For example, suppose you have a 30-day waiting period and a 2-year benefit period on an income protection policy in your retirement fund. In that case, you can buy more coverage with a 1-year waiting period and a benefit period that lasts until you turn 65.
Can you claim from multiple life insurance policies?
Yes, usually, your beneficiaries won’t have to worry about the payouts from multiple life insurance policies as long as the claim is valid and you told the insurance company everything important, including how much insurance you have, when you applied for life insurance. A typical claim process involves:
- Getting the death certificate.
- Filling out claim forms for each company.
- Sending all the forms and any other information they may need.
Why have more than one policy, and do you need it?
Most Australians want more life insurance when they go through big changes in their lives, like getting married, starting a family, buying a house, or changing jobs. Another reason could be that your employer offers group life insurance, but it doesn’t cover enough for your family if something happens to you.
You might also need extra insurance to cover fixed business costs when starting a business. This type of insurance is usually called “keyman insurance.”
Many people buy more than one type of life insurance. When you’re single and just starting out in your career, you usually buy a small amount of insurance. As your needs change and you can afford more insurance, you add more.
Before signing up for more than one policy, you might want to think about the following:
- Your budget: Can you pay the premiums every month? Check to see if your premiums go up or down or stay the same.
- It may take longer to get paid: Your beneficiaries might have to wait longer for a claim to be paid because it takes a lot of time to process. For each insurance company, you must fill out a separate claim form.
- Not taken advantage of: If you have more than one policy, your loved ones might need to learn about all of them, and this could cause benefits to go unclaimed.
- Most group policies are not written at the time of application: If you have a personal life insurance policy and one through a group scheme, check the PDS and other documents of the group fund to make sure you can hold multiple death cover benefits.
- Policy management: If you have more than one policy, you might have to do a little juggling. Usually, you have to review each policy once a year to ensure your personal information is still the same, your coverage amount is enough, and your beneficiary information is still correct.
- Over-insurance is a risk: Make sure that you really do need more coverage. If you have too much insurance, you will usually lose coverage that is worth more than the income you are trying to replace.
How to apply for policies with more than one life
How to buy more than one life insurance policy is to work with a broker or use a website that compares quotes from a number of Australia’s top life insurance companies.
Use free quote engine to compare prices, benefits, and features from top companies side by side in less than 60 seconds.
Other ways to avoid having multiple life insurance policies
You can buy fewer life insurance policies from different companies to make sure you have enough coverage. You could also:
- Choose a term life insurance policy that is guaranteed to be renewed. This will allow you to increase your coverage without giving you more information or going through a medical exam.
- When you combine policies, you can get more than one kind of cover. You may be eligible for a bundle discount if you buy multiple policies from the same insurance company, like life insurance and TPD.
- Double TPD is a benefit of a policy that covers both life and total and permanent disability. It lets you restore right away the part of your life coverage that was cut because of a total and permanent disability claim.
- A policy covering trauma and life can cover two types of trauma. You can get back the part of your life insurance that was cut because of a trauma claim.
- Trauma reinstatement gives you a chance to repurchase trauma coverage. Usually, 12 months after a claim for a critical illness listed in the insurer’s PDS has been paid out.
Conclusion – Can I have 2 life insurance policies in Australia?
Having more than one life insurance policy can help protect a person’s family or dependents financially in the event of their death. But keeping multiple policies can be expensive, especially if the premiums for each one are paid separately.
Before buying more than one life insurance policy, people should carefully think about how much coverage they need and how much money they have. Adding more coverage to a single policy may be cheaper than buying several separate policies. Asking for help from a financial advisor can also help a person figure out the right amount and type of coverage for their unique situation.