Should I Get More Than One Term Insurance Plan?
Updated On Apr 26, 2021
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A term plan is a pure life insurance plan where one’s life is covered with death benefits over a specific term. But financial experts suggest that it is highly beneficial to have more than one term insurance plan to include more than one beneficiary. Choosing different plans from different insurers will help the policyholder to have a comprehensive claims settlement ratio at different points of their life.
Advantages of Having More Than One Term Life Insurance
The advantages of having more than one term life insurance plans are as follows:
1. Increased Coverage
The coverage needs of people increase with age and when their family grows. |The responsibilities for earning members in a family keeps increasing and so is their insurance coverage needs. This gap can be filled perfectly with the help of another term insurance policy as the life cover is considered important for both current and future liabilities of their life.
A young individual with no major responsibility can purchase a policy for 30-years and pay a premium of Rs. 25,000 or choose two or three plans with different maturity periods. Thus having term plans with different covers can be aligned with different life stages. Also with multiple plans, the individual also has the liberty to continue or discontinue the plan based on his requirement.
2. Savings on Insurance Premium
By adopting many small plans, the individual will be able to save on the premiums, rather than paying a huge premium on a single policy. The plans will have different maturity rates and their aggregated policy cover amount will also be greater than a single term policy. Adopting different plans from different insurers is also a better idea to have a larger cover.
3. Reduces Risk of Claim Rejection
There is a marginal probability of claims rejection in every policy, though the policyholder has disclosed honest information. In such cases, if the insured family has to be denied the policy claims, the additional policy from another insurer comes to the rescue. If the claims are rejected by one insurer, it can be accepted by another.
Restrictions on Having More Than One Term Life Insurance
There are two major disadvantages of having more than one life insurance plans and they are,
1. Problems with Maintaining Many Policies
Individuals having more than one policy should pay the premiums many times and should also remember the due dates appropriately. Even during the claim process, it is important to claim the sum assured at multiple places.
2. Allocate Funds for Many Policies
Policyholders have to pay additional premiums for additional payments and if their financial situation is not bright in the future, this becomes an additional burden for them.
Having more than one term life insurance is beneficial, but there are few restrictions to apply for multiple policies. The total coverage amount of all the policies cannot be more than the future income of the individual. Insurance companies will scrutinize this potential when an individual applies for a second life insurance plan.
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