Claiming from multiple life assurance policies
Discussion
A current discussion we are having in my office…
If someone who died had two life insurance policies, can the benefactor claim the full amount from both providers?
I’m sure I read years ago that the two providers would share the burden of paying out. So if the policies were each for £100k, instead of them both paying out the full amount they would instead each pay out £50k?
If someone who died had two life insurance policies, can the benefactor claim the full amount from both providers?
I’m sure I read years ago that the two providers would share the burden of paying out. So if the policies were each for £100k, instead of them both paying out the full amount they would instead each pay out £50k?
That was not my understanding. I have four life insurance policies, taken out at different times. Initially it was just to ensure my wife was provided for, then to ensure the mortgage was paid off, then to ensure there was something or the kids in case something happened. It would be pretty pointless if I could only claim off one of them.
Life assurance (some call it insurance) is different from other forms of insurance.
The concept of "contribution" doesn't apply to life assurance, which isn't really normal insurance at all. A life can never be "repaired" or "replaced". Contribution is where, say, an asset is dual insured and each insurer pays 50%.
There's also the concept of "average", or under-insurance. If you do £10k of damage to a car worth £100k that's only insured for £50k the insurer will only pay out half, i.e. £5k. Again this concept is not applicable in the case of life assurance.
The concept of "contribution" doesn't apply to life assurance, which isn't really normal insurance at all. A life can never be "repaired" or "replaced". Contribution is where, say, an asset is dual insured and each insurer pays 50%.
There's also the concept of "average", or under-insurance. If you do £10k of damage to a car worth £100k that's only insured for £50k the insurer will only pay out half, i.e. £5k. Again this concept is not applicable in the case of life assurance.
You can have as many policies as you like, and sometimes it’s wise to do this to avoid medical underwriting. Always make sure a trust is used to mitigate IHT and speed up payment.
Income protection is different as you can only cover a certain % of your income so maybe this is where the confusion lays, but even then you can make up that percentage with several policies.
Income protection is different as you can only cover a certain % of your income so maybe this is where the confusion lays, but even then you can make up that percentage with several policies.
Panamax said:
There's also the concept of "average", or under-insurance. If you do £10k of damage to a car worth £100k that's only insured for £50k the insurer will only pay out half, i.e. £5k. Again this concept is not applicable in the case of life assurance.
That's a poor example, because only a very small part, if any at all, of your car insurance premium relates to the car value, so there's no way they could reduce a claim by 50% for a 50% under declaration of the value. The premium might be no different on 50 or 100K, or just a couple of % different. In fact, I don't even think car insurance policies have an average clause. But house contents insurance, for sure. Average would apply as you've described it.
I have my 'own' policy that goes to Mrs 22.
Then work pay for...
'Key man' cover - money for the company to recruit a new me.
Multiple policies (one finishes each year) that covers the 'debt' to the founders of the company that we are paying for.
Relevant life that pays a decent chunk to Mrs 22 (way beyond my own policy).
I'm surprised a regular bloke can be worth so much dead! They are all now with the same provider due to a merger/buyout.
All will pay in full at the time of my demise. The day after I retire I'm worthless to all.
Then work pay for...
'Key man' cover - money for the company to recruit a new me.
Multiple policies (one finishes each year) that covers the 'debt' to the founders of the company that we are paying for.
Relevant life that pays a decent chunk to Mrs 22 (way beyond my own policy).
I'm surprised a regular bloke can be worth so much dead! They are all now with the same provider due to a merger/buyout.
All will pay in full at the time of my demise. The day after I retire I'm worthless to all.
Panamax said:
Life assurance (some call it insurance) is different from other forms of insurance.
Not quite, Insurance covers the probability of an event happening, so for example of you are 20, life expectancy is to age 70, and you take out a policy to pay in the event of your death over say, 30 years, you have "insurance" against your early demise. Premiums are set based on the probability of that demise during the term of the policy.
Assurance covers a certainty. In which case you would have a policy that has no end date- as in not a 30/40/50 year term, it stays in force while the premiums are paid. And at some point, the policy holder will die, so it will pay out. You are "assured" of a payout. Premiums may be higher and may be reviewed, contrasting with insurance where often it's merely your circumstances at the inception of the policy that lead to the premium.
macron said:
Assurance covers a certainty. In which case you would have a policy that has no end date- as in not a 30/40/50 year term, it stays in force while the premiums are paid. And at some point, the policy holder will die, so it will pay out. You are "assured" of a payout. Premiums may be higher and may be reviewed, contrasting with insurance where often it's merely your circumstances at the inception of the policy that lead to the premium.
Whole Of Life policy.......Im surprised at work how many people arent in the pension scheme and actively opt out, these are people in their 50's on average and all say they cant afford it,
Not in the pension the life assurance is 1x annual/average earnings
In the pension the life assurance is 5x annual/average earnings
The company matches up to 7.5% of pension so its a no brainer but some people cant be helped to help themselves, all will be poor in old age, if anything happens the wife wont get much at all and will be even worse off
Not in the pension the life assurance is 1x annual/average earnings
In the pension the life assurance is 5x annual/average earnings
The company matches up to 7.5% of pension so its a no brainer but some people cant be helped to help themselves, all will be poor in old age, if anything happens the wife wont get much at all and will be even worse off
TheK1981 said:
The company matches up to 7.5% of pension so its a no brainer but some people cant be helped to help themselves, all will be poor in old age,
They deserve to be poor. if you make a 7.5% contribution yourself, if only costs you 6% as a 20% taxpayer and 4.5% as a 40% tax payer. For that you get 15% of your salary into your pension. Anyone who doesn't take advantage of that is a f
king idiot. TheK1981 said:
Im surprised at work how many people arent in the pension scheme and actively opt out, these are people in their 50's on average and all say they cant afford it,
Not in the pension the life assurance is 1x annual/average earnings
In the pension the life assurance is 5x annual/average earnings
The company matches up to 7.5% of pension so its a no brainer but some people cant be helped to help themselves, all will be poor in old age, if anything happens the wife wont get much at all and will be even worse off
Agreed. Unless they have some dire financial crisis where absolutely every 1p counts, then the first thing anyone should do when starting any job with a company pension scheme is join it. Then budget ahead with whatever money they have left after that. Do without holidays abroad, get a bog standard boring car etc, but join the bloody pension scheme!!!Not in the pension the life assurance is 1x annual/average earnings
In the pension the life assurance is 5x annual/average earnings
The company matches up to 7.5% of pension so its a no brainer but some people cant be helped to help themselves, all will be poor in old age, if anything happens the wife wont get much at all and will be even worse off
Some age my work say 'Yeh but I could opt out and put that money into a buying a rental house blah blah blah', they don't realise they are missing out on free money with he tax breaks, and employer contributions.
Similar to someone saying to them 'Give me £1 and I'll give you £2 back', with them replying 'But I need that £1'
Edited by The Gauge on Tuesday 14th January 18:54
The Gauge said:
TheK1981 said:
Im surprised at work how many people arent in the pension scheme and actively opt out, these are people in their 50's on average and all say they cant afford it,
Not in the pension the life assurance is 1x annual/average earnings
In the pension the life assurance is 5x annual/average earnings
The company matches up to 7.5% of pension so its a no brainer but some people cant be helped to help themselves, all will be poor in old age, if anything happens the wife wont get much at all and will be even worse off
Agreed. Unless they have some dire financial crisis where absolutely every 1p counts, then the first thing anyone should do when starting any job with a company pension scheme is join it. Then budget ahead with whatever money they have left after that. Do without holidays abroad, get a bog standard boring car etc, but join the bloody pension scheme!!!Not in the pension the life assurance is 1x annual/average earnings
In the pension the life assurance is 5x annual/average earnings
The company matches up to 7.5% of pension so its a no brainer but some people cant be helped to help themselves, all will be poor in old age, if anything happens the wife wont get much at all and will be even worse off
Some age my work say 'Yeh but I could opt out and put that money into a buying a rental house blah blah blah', they don't realise they are missing out on free money with he tax breaks, and employer contributions.
Similar to someone saying to them 'Give me £1 and I'll give you £2 back', with them replying 'But I need that £1'
Edited by The Gauge on Tuesday 14th January 18:54
Most are smokers/vapers, not the best health doing a physical job (driving a tesco van). Telling them £100ish in your pocket now, or £300 in your pension you can get when 57 and they think you are lying to them,
TwigtheWonderkid said:
TheK1981 said:
The company matches up to 7.5% of pension so its a no brainer but some people cant be helped to help themselves, all will be poor in old age,
They deserve to be poor. if you make a 7.5% contribution yourself, if only costs you 6% as a 20% taxpayer and 4.5% as a 40% tax payer. For that you get 15% of your salary into your pension. Anyone who doesn't take advantage of that is a fking idiot. beambeam1 said:
TwigtheWonderkid said:
TheK1981 said:
The company matches up to 7.5% of pension so its a no brainer but some people cant be helped to help themselves, all will be poor in old age,
They deserve to be poor. if you make a 7.5% contribution yourself, if only costs you 6% as a 20% taxpayer and 4.5% as a 40% tax payer. For that you get 15% of your salary into your pension. Anyone who doesn't take advantage of that is a fking idiot. He just doesn’t believe in pensions.
He’ll be alright though Moneywise
My firm only pay the minimum of 3% I’ve consistently rowed with them over it for many years.
Directors have nice cars tho.
It really irks me that they only contribute 3%
Often I end up in heated arguments about it.
Not so much for me because I’m probs ten years away
From retiring but the younger ones who don’t understand
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