Everything you should know about having more than one life insurance policy
If you’re like most people, when you first consider buying a life cover, you probably think of buying just one life insurance policy. But as you grow older, your financial goals may evolve. Your family may grow, and you may find that you need some extra protection.
It is at this point that you may stop and think about buying a second life insurance policy. That does seem like the logical thing to do. But let’s back up a bit and take a look at whether it is legally possible to buy more than one life cover.
In other words –
Can you have more than one life insurance policy?
The short answer is ‘yes.’
You can definitely buy more than one life insurance policy over the course of your life. There are no legal restrictions that limit the number of policies you can buy. Also, you can buy more than one life cover from the same insurer, or you can go ahead and buy different life insurance policies from different life insurance service providers.
That said, have you ever wondered why you would need more than one life cover, anyway? Let’s check out the scenarios where it could make sense to buy a second or even a third life insurance plan.
Possible reasons to buy multiple life insurance covers
Here are some common reasons behind buying more than one life cover.
- You may need extra protection
Initially, you may have purchased a smaller life cover. And at that point in time, it may have seemed enough. But over the years, a lot could change. You may have gotten married, had a few children, or even upgraded your lifestyle. In these cases, it only makes sense that your life insurance plan should keep up with these changes, isn’t it?
So, you may need to increase your life cover later in life. That way, your family would be financially better protected, and they can maintain the standard of living they are used to. It would also take care of any new life goals you may have as you grow older.
- You get to enjoy different policy features
The life insurance industry is constantly evolving. Ever so often, insurers are rolling out new, feature-rich products that offer different kinds of benefits to their policyholders. And this could become another reason for you to buy more than one life insurance plan.
Let’s look at an example. Say you buy a basic term insurance plan in your early 20s - one that gives you a significant life cover for nominal premiums. But as you turn thirty, a new life insurance plan is introduced - one that gives you an income benefit after a specific period. And you think you could benefit from this feature, so you go ahead and buy this life insurance plan. This leaves you with two life insurance plans - one that gives you a high life cover, and one that gives you income benefits.
In this way, multiple policies allow you to enjoy different beneficial features. For instance, if you have the ABSLI Vision LifeIncome Plus Plan and the ABSLI SecurePlus Plan, you get benefits like guaranteed income and a whole life cover option from the former, and an inbuilt accidental death benefit from the latter.
- You may be able to afford additional life cover later in life
There’s a good reason that most experts recommend buying a term plan when you’re young and just getting started with your career. It gives you a high life cover for lower premiums. This makes term insurance budget-friendly. But the fact remains that term plans only offer death benefits. And to purchase a savings plan or a Unit Linked Insurance Plan, you will have to pay higher premiums.
You may not be able to afford them at a younger age. But as you grow older and start to earn more, you may become better equipped to afford these life insurance plans. So, that may be another reason to buy a second life cover.
The advantages of having more than one life cover
Having more than one life insurance plan comes with its own set of unique advantages. Here are some benefits of multiple life covers.
- It lowers the chances of claim rejection
With just one life insurance plan in your portfolio, the chances of claim rejection are 50-50. But with multiple life covers, the chances of claim rejection are lowered. Even if one insurer rejects the claim, there are other policies that the beneficiaries can rely on.
- You can keep pace with your changing needs
Your needs - and your family’s needs - will undoubtedly change over time. For instance, you may have another child, or your parents may retire and grow financially dependent on you. An additional life insurance plan can help you take care of these changing needs.
- You can link different plans to different financial goals
Different types of life insurance plans take care of different financial needs. Savings plans, for instance, help you meet life’s milestones on time. ULIPs, on the other hand, help you create wealth. And retirement plans help take care of your golden years. With multiple plans, you can check all these boxes.
Things to keep in mind if you have more than one life insurance policy
If you have more than one life cover, or if you are planning to buy an extra life insurance plan, here are some important things to keep in mind.
- Disclose any existing policies
When you buy a life insurance plan, insurance companies will require that you disclose any existing policies in your name. You will generally find this field in the proposal form that you need to fill out after making your premium payment. Make sure you disclose any life covers you already have, so your claim is not rejected later.
- Pay your premium on time
The greatest challenge of having multiple life insurance plans? You also have multiple premiums to pay and keep track of. Skipping a premium payment beyond the grace period could lead to a policy lapse, making you lose your benefits. So, make sure that you keep timely reminders for all your premium dues and settle them on time.
- Keep your nominees informed
Your nominees need to be aware of all the life insurance policies in your name. After all, the main reason you get a life cover is to ensure that your family is financially secure, even in your absence, right? If they know about all the life covers in your name, it’s easier for them to raise a claim on those policies.
Now that you know why you may need an additional life cover, make sure you buy one if you find that there's a good reason to do so. The procedure for buying your second, third, or any other life insurance policy is pretty much the same as buying your first one. You just need to take care of the part where you have to disclose any existing policies.
And here’s a bonus something - additional policies also give you the same tax benefits1 as your first life cover. Thanks to section 80C of the Income Tax Act, you can continue to claim any additional premium as a deduction from your total taxable income, up to the limit of Rs. 1,50,000.
1Tax benefits are subject to changes in tax laws. Kindly consult your financial advisor for more details.
ABSLI Vision Life Income Plus (109N131V01) is a non-linked participating individual life insurance savings plan.
ABSLI Secure Plus Plan (UIN: 109N102V04) is a non-participating traditional insurance plan.
ABSLI Life Shield Plan
A term insurance plan that offers you the flexibility of plan options suitable for your family's non- negotiable goals and ensure they need not compromise on their lifestyle. UIN: 109N109V04
- Choice of 8 plan options
- Cover your spouse under the same policy
- Longer Life cover till age 85
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