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

25 Oct 2022

5 mins

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You are in your 20s and have just begun your career, so you probably think you will buy just one life insurance policy. But, as you grow older, your financial goals may change, your family may grow, and a single policy may not be sufficient to beat inflation and growing family needs. You may find that you need some extra protection. During this time, you may think it would be beneficial to have a second life insurance policy in order to extend your coverage and reap more benefits.

But! Is it legal to purchase another policy if you already own one? If so, is it a wise idea to get another insurance policy?

Let's find out.

First Of All, Are You Allowed To Have More Than A Life Insurance Policy?

Reasons To Buy Multiple Life Insurance Policies

Here are some of the most common reasons why you should consider purchasing multiple life insurance policies -

You Can Enjoy The Features of Different 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.

A Second Layer Of Protection May Be Necessary

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.

In The Future, You May Be Able To Afford Additional Life Insurance

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.

Advantages Of Having More Than One Life Insurance

There are a number of benefits associated with having more than one life insurance plan. Here are some -

Keeping Up With The Changing 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.

You Can Use Different Plans To Accomplish Different Financial Goals

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.

You Will Have Other Plans To Fall Back On In Case Of Claim Rejection

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.

Things To Keep In Mind If You Have More Than One Life Insurance Policy

Here are some important things to remember if you have more than one life insurance policy or if you plan to purchase an additional policy -

Existing Policies Must Be Disclosed

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.

Make Timely Premium Payments

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.

Share Policy Details With Your Nominees

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.

Summing up!

So, we've come to the end of our article. We hope you gained enough knowledge about the benefits of having multiple insurance policies. Before investing your hard-earned money, you need to consider certain factors in mind. These include - disclosing existing policies to your insurer, paying the premiums on time, etc. Lastly, make sure your family is aware of all the policies you own.

¹ Provided all due premiums are paid.

ABSLI DigiShield Plan (UIN: 109N108V09) is a non-linked non-participating individual pure risk premium life insurance plan.

ABSLI Assured Income Plus (UIN: 109N127V08) is a Non-Linked Non-Participating Individual Savings Life Insurance Plan.

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