At some point in life, every individual is faced with the question, “Can I have two term policies?” Yes, say experts. Although term insurance is much cheaper than the investment plus insurance products, experts also claim that one term plan may not be enough to cover an individual’s needs at different stages of his life since the financial goals may also vary. So, there are reasons why one must hold more than one term policy during his lifetime:
Every individual has different life priorities and goals depending on his stage of life. For instance, a 25-year old individual with no major responsibilities purchases a Rs. 50 lakh term insurance cover for a 30-year policy term at an annual premium of Rs. 25000. As an individual in his early stages of earning potential, he might not need the cover for all his 30 years. Instead he may choose a 10-year term policy for Rs. 10 lakhs at an annual premium of Rs. 5000 per annum, and then move towards a 10-year term policy cover of Rs. 25 lakhs at an annual premium of Rs. 15000 per annum to cover a child's education, home loan, and income protection. To cover the early years of retirement, he may choose a 10-year term policy cover of Rs. 15 lakhs at an annual premium of Rs. 10,000.
|Multiple Term Policies||Single Term Policy|
|Policy Term||Annual Premium Paid||Total Premium Paid||Policy Cover|
|10 yrs||Rs.5000||Rs. 50000||Rs. 10,00,000||30 yrs||Rs. 25,000||Rs. 7,50,000||Rs.50,00,000|
|10 yrs||Rs. 15,000||Rs. 1,50,000||Rs. 25,00,000|
|10 yrs||Rs. 10,000||Rs. 1,00,000||Rs. 15,00,000|
Choosing term insurance based on one’s current liabilities that change with time is not only crucial but also aligning multiple insurance plans of varying covers and terms with various life stages is a wise idea that gives the policyholder the freedom to continue or discontinue policies upon reviewing one’s needs.
From the above illustration, it is evident that the policyholder saves an amount of Rs.4,50,000 in annual premiums by opting for multiple term policies spread across different maturity time periods, as compared to purchasing a single 30-year term policy. Multiple term plans adding to a big cover is cheaper than a single term insurance plan with a high sum assured. Diversifying term insurance between multiple insurers is also a better idea, if the cover is large, and it is important to declare existing term covers while purchasing new ones.
Reducing the risk of claim rejection:
If the policy holder has been honest enough in declaring his health and medical history and has undergone required check-ups at the time of purchase, the chances of policy claim rejection by the insurer would be nil. However, there are ample cases to suggest that policy claim rejections do occur, although with a marginal probability. In such cases, the insured’s family shall be denied of the policy claims and having multiple term policies from different insurers can be beneficial. The total sum assured is not lost by the nominee, even if the claim is rejected by one insurer but accepted by another. The nominee can request the insurance company that rejected the claim to re-look at the claim. It is prudent to diversify insurers and choose them based on their proven track record of claim settlement ratios, even if they charge a little extra premium.
Benefit of additional Riders:
With multiple term insurance policies, the policy holder can avail extra benefits by opting for additional riders for a few term policies while purchasing other term policies without any riders.
Over to you
There is no restriction on buying multiple term insurance policies and buying more than one term insurance policy like the Future Generali Flexi Online Term Plan is certainly beneficial in terms of multiple death benefit options, affordable premiums (lower rate premiums particularly for women), coverage, riders, tax benefits under section 10(10D) of Indian Income Tax Act, and easy claim settlement process. Choosing multiple term insurance plans is essential to adequately cover an individual and his family’s changing needs and fulfil milestones such as children’s education or marriage, purchase a new home, at various life stages. However, one needs to be extremely cautious of paying exceedingly high premiums in the name of multiple term policies.