What Do You Need To Know About Having Multiple Life Insurance Policies?

The life insurance industry is evolving rapidly. Insurers are constantly introducing new products with features and benefits that are geared toward attracting policyholders. You may be happy with your current policy, but in a few years, there could be another with even better features. At that time, you can purchase another life insurance policy to enjoy a wide range of benefits.

Example: Rahul, a 23-year-old, buys a basic term insurance plan with sufficient coverage. But as he turns 30, a new life insurance plan is introduced - one that gives an income benefit after a specific period. He finds the plan appealing and decides to purchase this life insurance plan because he believes this income feature can prove to be beneficial. So, now he owns two policies - one that offers high life cover, and another which offers an income benefit.

Having multiple policies allows you to take advantage of a variety of benefits. For instance, if you have the ABSLI DigiShield Plan and the ABSLI Assured Income Plus , you can ensure your family’s financial security with the help of the former plan. With the latter, you will get a guaranteed1 income after the policy tenure is completed.

When you are young, you may buy an insurance policy with a small coverage and it may seem adequate at that time. However, as you age, your responsibilities will increase - say you get married, have children, or modify your lifestyle - resulting in higher expenses and liabilities.

Having said that, don't you think your life insurance policy should keep pace with your life changes?

When you purchase two or more policies, your family is better protected financially and they will be able to retain their current standard of living. Additionally, it would also act as a helping hand to accomplish all your life goals.

You may not be able to afford life insurance policies that meet your demands and requirements when you are young because you may not be earning as much. However, as you grow old and your income increases, you can afford to buy life insurance policies that cater to your and your family’s needs.

When you are young, you have a few responsibilities. As you age, you may take on different roles and assume additional responsibilities - you may have another child, or your parents may retire and become financially dependent on you, which increases the needs of your family. These needs only tend to grow. Additional life insurance policies can address these changing needs.

Different types of life insurance plans cater to different types of financial needs. Having an endowment plan, for example, helps you meet life's milestones on time, such as admitting your child to the college of their dreams. ULIPs give high returns and help you create wealth. As for retirement plans, they can take care of your post-retirement life. Having multiple plans at your disposal will help you accomplish all of these things.

Sometimes insurance companies may reject your claim due to reasons such as incorrect details provided in the proposal form, discrepancies in the documents submitted, etc. In case the claim under one policy gets rejected, you or your family will always have other policies to fall back on.

Insurance companies will ask you to disclose any existing policies under your name when you buy a life insurance policy. Your proposal form will normally have this field on it - you need to clearly mention the details of all the existing life insurance policies you hold in the provided provision. If you fail to disclose any existing life insurance, your claim might be rejected in the future.

It is true that multiple insurance policies have multiple benefits, but to keep all these policies active, respective premiums must also be paid and tracked. If you miss a premium payment beyond the grace period (extra time period given by your insurer to pay the premium amount), your policy could lapse and you would lose all your benefits.

So, keep track of all your premiums that are due and make sure that you pay them on time. You can set up auto-debit or standing instructions on your bank account - to ensure your premiums are paid on time and your policy doesn’t lapse.

Under some life insurance plans, your nominee will receive a claim amount in case you pass away while the policy is active. So, you should make sure your nominees are aware of the life insurance policies you have taken. They should be aware of the policy details, proceedings, claims process, etc. If they don’t, they may face complications during the claims process.

Additionally, to keep your policy documents safe and secure, you can store all your policies electronically in an e-insurance account or DigiLocker and share the credentials with your family members.