A term insurance policy is a low-cost solution to ensure financial security for your family after your unfortunate demise. With the help of a term insurance calculator, one can calculate how much their family would need in their absence. Considering the fact that our responsibilities continue to change either due to a second child or you took a lump sum home loan, what was once enough may not be enough in the future. So, what should you do? Firstly, it is important to examine your term insurance plan on a regular basis and if the need requires, one should purchase an additional term policy. An individual may purchase one or more term insurance policies in order to provide adequate coverage to their family. Just like one can purchase different term policies from different insurance companies, it is also permissible to claim those policies as well. In this article, you will learn what are the benefits and drawbacks of having multiple-term plans. At the same time, you will also learn how to claim those policies from various insurance providers.
Benefits of Having Multiple Term Insurance Plans
Having one or more term plans has various benefits, which are outlined below:
Your family has expanded: Your current term insurance coverage may be insufficient to cover your growing family responsibilities. For example, when you first started earning, you purchased a term plan with a coverage of Rs. 50 lakh. A few years later, you married and added your husband to the same term policy. After a few years, you both become parents, and your responsibilities naturally grow. You believe that the same term policy you bought years ago is insufficient to serve as a financial safety net for your family if something unfortunate occurs to you. You acquire a new term policy to ensure enough coverage. Having different term insurance plans will fill the gap between your coverage requirements and the increased responsibilities.
You will get higher chances of successful claim settlement: You should not hide anything when filling out the proposal form for a term policy because it may result in rejection during the issuing process or cause problems when beneficiaries seek death benefits after your unfortunate demise. However, the claim may be refused by the insurance company for any reason. If you have multiple-term insurance policies, your family may benefit from the other insurance provider.
Chance to improve the term plan with riders: Riders are an optional built-in feature that a policyholder can add to their existing term policy to improve its coverage. Adding riders to the plan will, of course, increase the premium chargeable but it ultimately increases the coverage also. Let’s look at an example to better understand this. Assume your term policy provides disability coverage but does not cover critical illnesses. Like a mindful policyholder, you will evaluate your family history of medical illness and find out they indeed have a history that may or may not affect you. In order to protect your family from your untimely demise, you can buy a critical illness rider. Purchasing a term plan with critical illness coverage will benefit you financially and having one or more term policies provides full protection to your family.
Cons of Having Multiple Term Insurance Plans
However, having numerous term life insurance policies may have certain downsides as well. Weighing the perks and downsides before purchasing two plans will help you better understand your financial needs and the gaps in meeting them.
You need to pay more for different life insurance plans: You will have to pay a premium for each term policy you purchase. If you have two term insurance plans, you must pay for both. It is highly recommended to use a term insurance calculator to ensure you know the total premium you will end up paying. In the end, it can cost you more. Furthermore, paying for different insurance plans can be complicated for some in regards to tracking the premium due dates for different plans. That entails remembering several premium payment dates. It’s possible that you’ll miss a payment date which will be an additional burden that you will have to deal with with a fine.
Conditions to Fulfil for Claiming Term Insurance Plans
To claim a term policy, certain conditions must be met:
- If you have one or more term policies, the insurance company should be informed about the current policies when you buy another one.
- The nominee is required to submit a death claim. To do so, the nominee must complete and submit the claim form, in addition to the necessary documents such as the policy bond, identity proof, bank information, and so forth.
- In the case of accidental deaths, a police FIR is necessary for claim filing.
Things to Consider Before Choosing Multiple Term Insurance Plans
If you are considering getting many term insurance plans, here are some factors that you should remember:
- The total premium for every policy should be reasonable so that you can keep coverage active in all plans.
- The overall sum assured should be sufficient to ensure financial stability for your family. While underinsurance is damaging, overinsurance is unnecessary and increases premium costs. You can use the online term insurance calculator to determine the same.
- Look for plans that provide the most extensive coverage available so that you can be insured for an extended period of time.
- When you are purchasing the second term policy, inform the insurance company about your existing term plans. At the same time, it is essential to not hide any details from the insurer when applying for coverage in order to avoid claim rejection later on.
- Set up an auto debit mandate on your bank account to ensure that the premiums for all of your policies are paid when they are due and that you do not miss any premiums.
So we are saying,
A single-term policy may not always be sufficient to suit your needs. You may want to add another term plan to your portfolio to ensure enough protection. Before purchasing the two different term plans, policyholders need to understand that both plans don’t need to be the same. Another point to be kept in mind, in the quest to get comprehensive coverage, your regular household expenses shouldn’t get compromised. Thus, use a term insurance calculator to understand the total premium one will be required to pay. At last, both the plans are legal to have, and an insurer has no right to intervene with the other insurer. However, it is best to give all relevant information to the insurers about the plans you have.
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