Can you benefit from more than one life insurance policy? Doing too much is by no means a good idea. The same can be said about having too many life insurance policies. There should be a needs-based approach!
Much awareness of life insurance is now spreading across the country, with more and more people investing in policies to mitigate their financial risks. People also buy multiple policies to cover future financial risks. Is this the right thing to do? Is it worth having multiple insurance policies? The truth is that a person should have more than one life insurance policy. When you plan your finances properly, you can end up with more than one life insurance policy.
The problem with overdoing things is that overdoing it is not good as with most things in life. In this case, having too many life insurance policies is also not recommended. Buy only the policy you need. If you have to buy it, then go for it. More than 20 strategies can cause tracking issues. You must provide details of other policies you have each time you purchase a policy. By failing to provide other information, your death request may be refused.
Is it necessary to have multiple life insurance plans?
It is always recommended to have one term insurance policy plus another to cover the needs of the family if a term policy is not enough. However, it is possible to purchase multiple life insurance plan, but the policyholder must make the decision to determine his insurance needs. Underwriting guidelines determined by insurance companies are based on the insured’s annual income, age and ability to pay premiums. Keep yourself as fully covered as possible up to your maximum eligibility limit at all times.
To keep up with changes in family income and lifestyle, insurance coverage needs to be increased. Depending on the size and needs of the family, a policy may not cover all of the family’s needs. Policyholders under the age of 30 can receive a maximum sum insured between 25 and 35 times and up to 10 to 15 times the annual CTC. You should always make sure that you are sufficiently covered up to the maximum limit allowed.
You would also be responsible for more financial obligations as you get older. You could go for a life insurance plan for someone in their 30s and expect to be covered even in their 50s, but that wouldn’t be a good idea. In addition, several life insurance plans can be taken out since they each have different objectives. To keep all policies in force, premiums must be paid on time.
Are you eligible for more than one life insurance plan?
A claim can be made for all life insurance plans as long as the sum insured is equal to or greater than the eligible sum insured. During the life insurance plan claims process, consumers should be honest with insurance companies. An applicant should provide all transparent and complete details on any insurance plans you have purchased when making a claim on your multiple insurance policies. For the settlement of a claim, insurance companies follow a defined set of procedures.
Benefits of multiple life insurance plans
It pays to take out multiple life insurance policies. For example:
- Protection against all financial risks
You are also optimally insured when you have multiple life insurance policies. Supplementing an existing plan can provide you with full coverage if your coverage is insufficient. You can always choose from additional plans until you have adequate coverage, and the insurance is used as a “risk mitigation tool”.
However, it is recommended to go for a high policy at a younger age as it will save you money on the premium; however, not everyone can afford it. Alternatively, there could be a lack of intention or awareness. Therefore, if your income and financial responsibilities increase later in life, you can improve coverage by purchasing a new life insurance plan to stay properly covered.
- Plans that meet different needs
Different policy is needed for different financial needs. A term plan can replace your income, while a children’s plan can create a nest egg for your child. To maximize returns on investment, you can invest in ULIPs, while retirement planning can be managed with pension plans. Having multiple life insurance plans allows you to maintain a diversified portfolio that can meet all of your financial needs, as each type of policy can fund a specific goal.
- Increased tax benefits
Plans that offer life insurance are tax-efficient. There is a deduction of up to Rs 1.5 lakh for premiums paid. You can take advantage of the maximum deduction allowed under Section 80C by purchasing multiple plans, thereby maximizing tax benefits.