Can You Have Multiple Life Insurance Policy

Is it wrong to own more than two bikes? The answer is certainly no if you can afford it. Life insurance policies are no different. It is up to you how many you wish to hold. But, one key difference does exist.

A lifelong commitment such as life insurance requires careful financial planning. One wrong decision can cost you valuable time and money. While you can own more than one bike or car out of interest, you cannot do the same with life insurance; it is not for enthusiasts.

Buying multiple life insurance policies is perfectly okay, but you should only buy them if you need them. So, what are the circumstances where holding multiple life insurance policies makes sense?

Let's find out.

These are the reasons why buying multiple insurance policies is a good decision -

• ➔Different Policies Have Different Features
  New products are introduced to the insurance market every other day. Insurers launch different products with different features and benefits with the aim to bring in more customers.
  You may think your current policy is fine now, but there might come another policy in a few years with improved features. You can buy the new policy to enhance your life insurance coverage and enjoy more benefits. Therefore, you have the opportunity to take advantage of multiple benefits from two policies at the same time.
  
  Example: Raghav, 25, purchases a term insurance plan with sufficient coverage. When he is in his 30s, he wants to start saving for his retirement. So, he decides to invest in an annuity plan that will give him a regular income once he retires. Now he has two policies: one that protects his family with adequate life insurance cover and one that will support him during his retirement years.


• ➔The Need For Additional Protection May Arise
  Being young means having fewer financial obligations and fewer financial dependents. Therefore, an insurance policy with a small coverage may be sufficient at the time. As you grow older, your responsibilities increase - say you get married, have children, wish to buy a bigger home, etc. Eventually, your expenses and liabilities will rise.
  As your needs change, so should your life insurance policy. If you purchase two or more policies, you can give your family all-rounded financial protection and ensure their standard of living remains intact. The proceeds from the policies will also make sure that your and your family’s goals are met at the right time.


• ➔Adding More Life Insurance May Become Feasible In The Future
  When you are young, you may be at the start of your career with less income. Hence, you may not be able to afford life insurance policies that can accommodate your and your family’s long-term objectives. As you earn more money, you will be able to afford life insurance policies that are sufficient to meet your needs and those of your dependents.

Before investing in another insurance policy, you should first examine whether your current coverage is adequate for your growing financial goals and if it is inflation-proof. If it proves to be insufficient, consider investing in another policy. Buying multiple life insurance policies can be a smart way to get additional coverage to insure against a specific debt, like a mortgage, or to have a more sophisticated financial strategy.

So, you should invest in multiple policies if you are backed by the right financial reasons. And, you need to make sure you pay all the premiums on time and for the whole duration of each of those policies, otherwise, they will lapse and you’ll lose coverage.

Having multiple life insurance policies has quite a lot of benefits. Here are some:

• Serve As Back Up In Case Of Claim Rejection
  There are times when insurance companies may reject your claim due to errors in the proposal form or in the supporting documentation or mistakes in the medical declaration. If this happens, you or your family will be caught in a financial bind and your second policy will save the day. So even if a claim under one policy is rejected, any other policies you own can act as a backup, especially in emergencies.


• Help You Meet Your Growing Needs
  When you are young, you don't have many responsibilities. Growing older may bring new responsibilities and roles. You may get married, your parents may retire and become financially dependent on you, etc. - calling for increased financial protection. Inevitably, your needs will continue to grow. They can be taken care of by purchasing additional life insurance policies.


• Different Financial Goals Can Be Achieved With Different Plans
  There are different types of insurance policies based on different financial needs.
  
  For instance -
  👉A term plan can be used to replace your income when you aren’t around.
  ·👉A child plan can provide a good fund for your child’s future milestones.
  👉ULIPs are a good investment option if you want market-linked returns.
  👉Pension plans help you plan for retirement.
  
  And so on.
  
  Every type of life insurance policy serves a specific purpose. So, if you have multiple policies, you can build a diversified portfolio to meet all your financial goals. For instance, if you have a spouse and young kids who are dependent on you financially, you can choose a term insurance plan that will support your family in your absence and a child plan that will take care of kids’ key milestones like education and marriage.

If you are new to the insurance world, begin with one policy and then supplement it as your financial needs increase. Examine your existing life insurance policy to determine whether it is adequate. If the coverage is inadequate, you can purchase additional plans and optimise the sum assured. Ensure that your insurance portfolio is complete even if it means buying multiple policies.