Multiple Life Insurance Policies

Should you buy multiple life insurance policies?

Is there any benefit of having multiple life insurance policies?

Just as most things in life, anything done in excess is not good.

So having way too many life insurance plans is also not advisable.

It should be need-based!

Multiple Life Insurance Policies

Insurance awareness is now rapidly increasing across the country with more.

More individuals investing in life insurance plans to cover their financial risks.

Many individuals are also buying multiple life insurance policies.

But, is it right? Should you have multiple life insurance plans?

According to Deepak Yohannan, CEO, My Insurance Club, there is nothing wrong with having multiple life insurance policies.

In fact, if you are doing your financial planning properly.

You will end up having multiple life insurance policies.

“Your income keeps changing and you should be increasing your cover amount accordingly.

Also, plans are give on the basis of an income multiplier.

You should have adequate term insurance cover at every stage in life.

You should plan for your retirement and you should look at investing – for all of these.

There are insurance solutions which you can take,” Yohannan told FE Online.

However, he caution, just as most things in life, anything done in excess is not good.

So having way too many life insurance plans is also not advisable.

It should be need-based.

If there is a requirement, then go for it.

Having 15-20 policies can lead to even tracking issues.

Also, every time you take a policy you will have to mention details of the other policies which you have.

Failure to mention all details can lead to death claims being deny.

Pay Premium on Time

With the rise in age, your financial liability would also rise.

So, opting for a single life insurance plan in your 30’s.

Then hoping to be adequately cover even in your 50’s might not be such a viable option.

Also, different life insurance plans have different purposes.

Multiple plans can surely be take.

But all policies need to be manage with the timely payment of premiums to keep them in force.

Multiple Life Insurance Policies

Reveal Past Policies

Experts see life insurance primarily as a hedge investment and a risk mitigation tool.

It is thus consider to be your Plan B.

However, there could be other benefits such as collateral for loans as well.

“So, yes, you can always opt for multiple life insurance plans.

You should, if you feel that you are under-insured.

Just remember to disclose all information about your earlier life insurance plans at the time of opting for the subsequent ones.

As underwriters would need to consider your overall life insurance coverage before issuing your plan.

Also, you could opt for an e-insurance account (eIA) to manage your policies better.

“You can also earmark each policy to a specific goal so that your financial planning is target.

The life insurance protection that comes as an added benefit.

Would also provide financial security to your loved ones in your absence.

Multiple Life Insurance Plan Benefits

There are different benefits of buying multiple life insurance plans. Such as:

Complete financial protection

Multiple life insurance policies also ensure that you are optimally insure.

If you have an existing plan where the coverage is not adequate.

An additional policy would help in supplementing your existing coverage to offer you complete protection.

Insurance is use as a “risk mitigation tool” and till you have adequate insurance coverage.

You can always opt for additional plans.

“However, it is advisable to opt for a high coverage at a younger age.

So that you can save on the premium, it might not be feasible for everyone.

Or there could be a lack of intent or awareness.

Thus, at a later stage in life, you can step up the coverage as your income.

Financial liability grows to be adequately insure by opting for another life insurance plan.

The overall life insurance coverage depends on annual income.

Life stage, dependents, and liabilities as well as financial goals.

However, the generic thumb rule states that you need to have a minimum of 10-15 times your annual income.

If you choose multiple maturity dates for multiple plans.

You can get staggered pay-outs at different intervals.

This also creates multiple income streams that can be use to match the timelines of your financial goals.

Multiple Life Insurance Policies

Different plans for different needs

Different financial needs require a different policy.

For instance, term plans are need for income replacement while child plans help in creating a secured corpus for your child.

“If you are looking for investment returns you can invest in ULIPs while pension plans help in retirement planning.

Each type of life insurance policy can be used to fund a specific goal.

So, with multiple policies, you can create a diversify portfolio that takes care of all your financial needs.

Increased tax benefits

Life insurance plans enjoy tax benefits.

The premiums pay are allow as a deduction of up to Rs 1.5 lakhs.

When you buy multiple plans, the aggregate premium is higher allowing you to claim the maximum deduction offer by Section 80C.

Thereby optimizing tax-saving benefits as well.

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