Can I Buy Two Term Insurance Plans?
Can I Buy Two Term Insurance Plans?
12/27/22 11:16 AM
Term Insurance is a precautionary financial cover that protects your family against unpredictable scenarios. As it secures their financial standing even in your absence, a term plan is often considered to be one of the most important financial instruments of today. Especially in the post-pandemic environment that demands a protection-oriented financial plan, term insurance has positioned itself as a necessity and not a choice.
While term life insurance promises comprehensive protection, some financial experts believe that just one term plan may not be enough to cover the evolving financial needs at different stages of life.
However, before you buy term insurance, whether it is one or more than one, it is important to carefully analyse your financial requirements for a suitable cover.
What is Term Insurance?
Term insurance is a type of life insurance that provides coverage for a specific period of time, such as 10, 20, or 30 years. In the event of the your unfortunate death during the term, the insurer pays a death benefit to the designated beneficiaries.
To obtain a term insurance policy, you must pay a premium to the insurer. The premium amount may vary based on your age, health, and the type of coverage selected. You can also add riders, or additional coverage options, to your term insurance policy for added protection.
One of the main advantages of term insurance is that it provides a significant amount of coverage for a relatively low premium. To save on premiums, many people opt to purchase term insurance online, as the premiums are often lower than those purchased in person. Online term insurance also allows you to easily compare different policies and choose the one that best meets your needs.
Benefits of Buying Multiple Term Insurance Policies
Although term insurance is a cost-effective way to provide a significant amount of coverage, just one policy may not be enough to meet all your financial needs. To prevent a situation where your coverage is inadequate, you can invest in two term insurance policies. Here are the benefits of investing in more than one term insurance policy:
- Additional responsibilities at different stages of life: Term insurance provides coverage for only a specified period of time. However, as you grow older and take on new responsibilities, you may need additional coverage to protect your loved ones. By investing in more than one term plan, you can ensure that your family is adequately protected at all stages of your life.
- Human life value: When calculating the amount of life insurance to purchase, the human life value represents the amount of money an individual is likely to earn during their lifetime. By investing in more than one life insurance policy, you can ensure that your family receives the combined benefits of both policies and the full human life value even after your death.
- Enhancing with riders: Riders are additional coverage options that can be added to your term insurance policy at a nominal cost. By investing in more than one term insurance policy, you can choose different riders from different insurers to provide comprehensive protection.
- Increase your chances of successful claim settlement: With two term insurance policies, you double your chances of receiving a payout from your life insurance. If the claim is rejected by one policy for any reason, your family can rely on the other policy for the death benefit.
But what leads to a term plan claim rejection? Let us find out!
When you buy term plan, it is necessary to carefully read and understand the terms and conditions associated with the policy. It often happens that the policyholder fails to honour the terms of the policy and risks claim rejection. This can greatly compromise the financial standing of your loved ones in your absence.
Following are the clauses wherein your insurance claim can be rejected:
- Policy Lapse: Term life insurance is a service offered by the insurance company for which the policyholder is expected to make regular premium payments. When the premium payments are not made on time, the policy lapses. It also reflects poorly on the profile of the insurance seeker and results in higher premiums at the time of policy renewal. Although insurance providers give a grace period to make the premium payments, it is highly recommended to ensure timely payments to prevent lapses. This is because if in the unfortunate event that the policyholder passes away after the policy lapses, the nominees are not given the sum assured.
- Undisclosed Health Conditions: As the premium amount is higher for individuals with greater health risks, insurance seekers often think that not disclosing their health condition is a good idea to save on a few bucks. However, insurance providers usually ask for a medical examination, and it is practically impossible to hide any health conditions in the tests.
The same applies to smoking habits. If the insurance provider realises that the habit of smoking was not disclosed and the individual passes away, no death benefit is payable to the beneficiaries. It is imperative to be transparent with the insurance company for complete safety.
- Non-disclosure of Other Insurance Policies: Insurance seekers are expected to let their insurance providers know about other insurance policies that they may have purchased. Withholding this information can lead to a rejection of the claim.
There should be a connecting line here at the end of this sub-topic, something like “ensure you disclose your existing term policy before purchasing another.” To prevent this from happening, it is important to be aware of all the components of the policy before you buy term plan. Also, make sure to disclose any existing term policy or any other life insurance policy details before buying the second life cover.
To prevent this from happening, it is important to be aware of all the components of the policy before you buy term plan. Also, make sure to disclose any existing term policy or any other life insurance policy details before buying the second life cover.
It is possible to enhance your financial protection with multiple term life insurance policies. You can ensure coverage for the changing insurance needs at different stages and increase the chances of a successful claim settlement. However, make sure that you disclose all the information of the existing policy before buying the second one.
Neha Panchal - Financial Content Writer
Neha used to be an Engineer by Profession and Writer by passion, which is until she started pursuing full-time writing. She's presently working as a Financial Content Writer, with a keen interest in all things related to the Insurance Sector.