Skip Ribbon Commands
Skip to main content
 

Life Insurance Dilemma: Do We Need a Second Insurance Policy?


Life insurance policies vary in their ability to address different goals at different stages of life.

Life insurance policies vary in their ability to address different goals at different stages of life. People within the same income range and habits may have varying perceptions of risks and wants. Insurance agents also offer options for consultation and mutual discovery.

As time passes, new challenges may arise out of social and technological change and new insurance solutions are required to prepare for consequent financial contingencies. While purchasing a second life policy, the following things need to be kept in mind.

What is your Financial Goal?
You can make short term or long term plans. Term insurance is suitable for a single family unit, where the policy holder aims to streamline costs such that the maturity of the instrument happens when major heads of expense in life have been dealt with and the insurance can then supplement pension.Whole life insurance secures protection throughout the lifetime of dependents and wealth for future generations.
 
Employer's Insurance
Employers generally provide group insurance with low payouts that may prove inadequate for individual needs. One must consider a second policy to meet changes in employment circumstances.
 
Understand Subscribed Policies
Insurance covers can be used to access benefits such as withdrawals, loans, etc. Term plans are without a cash value and only insure the family against your death while the policy is active. Whole life insurance, on the other hand, has a continuously appreciating cash value while allowing the holder to avail of loans and surrender values. The latter has higher premiums but achieves different objectives. Changing regulation and economic environments should also be kept an eye on.
 
Riders can Enhance Life Insurance Plans
Term Insurance riders on your policy are extra benefits that come at a nominal cost and include:

  • Waiver of Premium in the event of illness or accidents.
  • Critical Illness rider to get the whole sum assured for mentioned critical ailments.
  • Accidental death and dismemberment rider.
  • Income benefit rider in case of loss of income arising out of medical leave of absence from work. Substitutes for income are disbursed monthly from the premiums so far paid.
  • Surgical care or Hospital care rider where the policy holder can access a lump sum benefit or a daily cash benefit till the duration of a clinically mandatory procedure.
Most policy holders are either under insured or over/wrongly insured. Under insured people need to opt for a second policy, while the others need to be prepared for new evolution of circumstances or opportunities and change in existing policies. Consult a qualified financial adviser for personalized advice.