Having life insurance is a must; this is common knowledge. But millions deprive themselves of the financial support easily available due to short sightedness. Fortunately, it is better late than never. Just divide your big coverage into two or three smaller portions when renewing it. This way, you can drop or add policies as and when your financial requirements change.
Advantages of having multiple life insurance policies
Having multiple life insurance policies entitles you to the following benefits:
- Diversification: It lets you diversify your insurance protection. You can have the kind of protection you need from every insurer you choose
- You stay safe even if one company reject your claim. If it happens, you can approach another company. It minimizes your loss.
- You take care of your changing financial requirements: Your financial needs change from time to time. You start earning, marry and have a family, have children and grow old. At this stage, your health starts deteriorating. Having term life insurances with differing maturities will do wonders. They let you get benefited from time to time depending on your financial situation.
Points to remember
Keep the following points in mind when applying for multiple life insurance policies:
Be aware of the general restrictions
When applying for multiple insurance covers, make sure that your total premium doesn’t exceed your human value. Human value is the amount you are capable of earning during your working years. There will come a time when you are not able to earn. Continuing with your insurance protection after that will drain your budget. Use human value calculators available online for the purpose.
Be honest when filling the insurance application form
Make sure that you don’t hide anything from your insurer. The company is sure to assess your application on its own. If it finds that you deliberately misrepresented or hid information from them, it will reject your claim. The same applies to health issues. You smoke and you hid the information from your insurance agent. And you die because of smoking. The insurer has all the right to reject your claim. You kept your habit a secret.
Digi Locker or E insurance locker are a must
It is always recommended to take a digi locker to keep the documents safe. People with multiple term plans to ensure that their families do not miss on any accrued benefit when they are not around.
Make your beneficiaries aware of the plan that you are purchasing
Keep your beneficiaries aware of the policies that you are purchasing. On many occasions on demise of the policy holder, the family is unaware of the payments made and benefits accrued, and they end up being short changed while the policy holder might have paid many premiums over the years.
Always keep a track
Multiple plans from multiple companies exposes the family to many different regulations from each company. It is always best to understand 2-3 companies’ regulations completely and purchasing from them instead of putting money in policies whose Terms & Conditions are unclear to the nominee. Always keep a track of what all has been paid by the policy holder and thereby benefits accrued is a challenge for most families.
It is also advised that you refrain from buying too many policies. Doing so will defeat the purpose of life insurance. Too much of everything is harmful. And too much of protection will do the opposite.
Having multiple life insurance policies protects you all your life. It lets your loved ones enjoy a comfortable life in your absence. Just be careful not to go overboard.