NLIC.org

Leonard Said:

life insurance application information sharing?

We Answered:

No it's not going to be stored Unless the company you plan to apply to is partners with the first company where they would have a shared file. But no it's not going to be stored on some broad database or anything. It's not smart to admit to things like that though.. keep it to yourself next time. Keep in mind.. if you happened to die and your body was examined and they found you used some sort of illegal drug use (even if it was not the cause of death) the life insurance would be void and would not pay out because of it.. stay away from drugs.

Joy Said:

Does UK Law Permit Having More Than One Life Insurance Cover?

We Answered:

There is no legal limit to the number of life insurance policies that you can hold, however you do have to be able to prove insurable interest.

When you apply for life insurance, the insurance company will ask if you have existing cover and if it is going to be replaced by the new policy or is additonal cover. They will assess if - accotding to their risk profiling and underwriting limits - if they believe this is a reasonable amount of cover (depending on why and who you are insuring), and may or may not accept you when they do their financial underwriting (medical underwriting is something else).

If, for example you are married and have a mortgage of £500,000, it is perfectly reasonable to have £500k worth of life insurance - if you choose to take that cover from 5 different insurance companies, for example, no problem. Insurable interest exists because you have a mortgage and the surviving spouse would clearly be disadvantaged if the other died.

In any event insurable interest between spouses is assumed and unlimited i.e. you can in theory take out life insurance on a spouse for an unlimited amount of money (subject to affordablilty) however, if you both earn £25,000 a year and are age 40 with no mortgage, a life insurance company might still question why you need life insurance of £10m.

In other situations i.e. not involving spouses or children, you will need to prove or at least explain, why you are taking out life insurance. You can't take out life insurance on just anyone - you have to be able to argue that you would be financially disadvantaged if that person died. Some examples could be; a company insuring a key member of staff (such as top-salesman), insuring an ex-spouse to ensure the continuation of maintenance payments etc.

As a previous poster has said, for other forms of insurance, such as income protection - although there is no legal limit to the number of insurance policies - the insurer may limit the benefit to a percentage of salary and thus restrict payment. You could end up in the position of having paid premiums for a benefit that you are ineligible to receive.

Lastly, tax relief on new insurance premiums is no longer available. LAPR applied to policies takenout prior to March 1984 (although policies that are still running and have not been changed can, I believe, still receive it). Likewise tax relief on PTA was withdrawn to new policies from 2007.