Multiple life insurance plans with premiums and returns that match your family's financial situation
Can you benefit from having more than one life insurance policy? Overdoing anything is not a good idea in any case. The same can be said about having way too many life insurance policies. There should be a need-based approach!
A great deal of awareness regarding life insurance is now spreading across the country, with more and more people investing in policies to mitigate their financial risks. People are also purchasing multiple policies to cover any future financial risks. Is it the right thing to do? Is it worthwhile to have multiple insurance policies? The truth is, a person should have multiple life insurance policies. When you plan your finances properly, you may end up with more than one life insurance policy.
The problem with doing things in excess is that doing too much isn't good as with most things in life. In this case, having too many life insurance policies is also not recommended. Only buy the policy you need. If you are required to purchase it, then go for it. More than 20 policies can cause tracking issues. You should provide details of other policies that you have each time you purchase a policy. By failing to provide other information, you may have your death claim denied.
Is it necessary to have multiple life insurance plans?
It is always recommended to have one term insurance policy plus another to cover family needs if one term policy is not enough. However, it is possible to buy more than one life insurance plan, but the policyholder must make the decision to determine their insurance requirements. Underwriting guidelines determined by insurance companies are based on an insured's annual income, age, and ability to pay the premiums. Keep yourself as fully covered as possible up to your maximum eligibility limit at all times.
To keep up with the family's income and lifestyle changes, insurance coverage must be increased. It is possible for one policy to not cover all the family's needs depending on the size and needs of the family. Policyholders under 30 years of age may receive a maximum sum insured of between 25-35 times and up to 10 -15 times the annual CTC. You should always ensure that you are adequately covered up to the maximum allowable limit.
You would also be liable for more financial obligations as you get older. You could opt for a single life insurance plan in your 30's and hope you're covered even in your 50's, but that wouldn't be a good idea. As well, several life insurance plans can be taken since they each have different purposes. To keep all policies in force, premiums must be paid on time.
Do you qualify for more than one life insurance plan?
One can file a claim for all life insurance plans as long as the sum assured is equal to or better than the eligible sum assured. During the claim process for the Life Insurance Plan, consumers should be honest with the insurance companies. A nominee should provide all transparent and complete details about all insurance plans you purchased when claiming 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 is beneficial to purchase more than one life insurance policy. For example:
- Protection from all financial risks
You are also optimally insured when you have multiple life insurance policies. A supplement to an existing plan can provide you with complete coverage if your coverage is insufficient. You can always choose from additional plans until you have adequate coverage, and insurance is used as a "risk mitigation tool."
However, it is recommended to opt for a high policy at a younger age since it will save you money on the premium; however, not everyone can afford it. Alternatively, there could be a lack of intention or awareness. Hence, if your income and financial responsibilities grow later in life, you can enhance the coverage by getting a new life insurance plan to remain adequately covered.
- Plans that meet different needs
A different policy is needed for different financial needs. A term plan can replace your income, while a child plan can create a nest egg for your child. To maximize investment returns, you can invest in ULIPs, while retirement planning can be handled with pension plans. Having multiple life insurance plans allows you to maintain a diversified portfolio that can meet all your financial needs, as each type of policy can fund a specific objective.
- Tax benefits increased
Plans that provide life insurance are tax-advantaged. There is a deduction of up to Rs 1.5 lakh for premiums paid. You can take the maximum deduction allowed under Section 80C by purchasing multiple plans, thus optimizing the tax benefits as well.