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Why Should You Have Multiple Term Life Insurance Policies?

  6/5/23 10:44 AM

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There is no denying that a term life insurance policy fortifies your financial planning, and so the earlier you invest in one, the better. For novice buyers, a pure term insurance plan is a wise investment in the initial stages of a career as it is easy to understand. A term plan protects the financial wellbeing of your family even in your absence.

When you buy term insurance, you are expected to pay a term insurance premium for the tenure of the policy, and in the event of your untimely demise, the insurance company pays a death benefit to the surviving beneficiaries. In a pure term insurance plan, if you survive the term, there is no pay-out offered.

While the equation seems fairly straightforward, sometimes the tip to bridging the gap between a good and a perfect financial road map is buying multiple term plan policies.

Why Should You Buy Multiple Term Insurance Policies?  

One of the greatest advantages of a term insurance plan is that it offers high coverage at an extremely affordable term insurance premium. However, financial needs tend to change with different phases in life, and to keep up with these changes, financial experts often recommend investing in more than one term life insurance policy. Here is how multiple term life insurance policies can prove to be highly beneficial:

1. Addressing Changing Financial Needs

Just as our life tends to change, our financial requirements also need a revised look. When an individual is young and is just starting with their career, they don’t have too many responsibilities that need to be shouldered. At a time like this, a small coverage policy seems sufficient to address the financial needs of your dependents should something happen to you. Even the liabilities at this age, such as paying for a higher education loan, or EMIs for the purchase of a new vehicle, are not that high.

However, as you grow older, the responsibilities deepen. You may have a family to look after, and your future expenses include paying for a home, or the higher education of your child, etc. At a time like this, the pure term insurance plan that you purchased in the initial phase of your career is inadequate to sustain your family in your absence. During this time, it is prudent to invest in another term life cover to address the coverage gap that arises owing to greater responsibilities. 

2. Coverage for Future Liabilities

You might believe that you will be able to save more with the purchase of just one term plan instead of spending on multiple ones; however, this is not true. Buying term plans with different maturity dates can actually help you save money instead of spending more. This is better illustrated with an example.

Consider that an individual aged 25 has purchased a term life insurance policy worth ₹2 crores that will mature at the age of 65. Initially, this term life is sufficient to cover future family expenses. Consider that this individual also has an outstanding amount of ₹70 lakhs for a house loan, the EMI for which will have to be paid for another 20 years. To cover this liability, they can purchase another term insurance for ₹70 lakhs for 20 years.

Contrarily, if the amount was clubbed to purchase term insurance for ₹2.70 crores, this individual will have to pay the term insurance premium for that amount for 40 years when actually the loan will not be needed after 20 years. This would mean that they have unnecessarily shouldered a futile expense.

3. Preventing Risk of Claim Rejection

The reason for buying term insurance is simple – we want to ensure that even if something were to happen to us, the financial footing of our loved ones remains steady. In this endeavour, it is best to exercise as much caution as we can. Although insurance companies don’t usually reject claims unless the proposal form was misleading, there are occasions wherein the claims might not be settled. This can induce a lot of panic in your family when you are not around. To prevent such an unpleasant scenario, it is recommended to buy multiple term insurance policies so that if the claim is rejected by one insurance company, the second insurance provider can settle the claim. However, it is crucial to inform all the insurance companies about any existing term insurance policies that you have. Failure to do so can lead to a sure rejection of all claims.

To avoid claim rejection, ensure complete transparency in your insurance form. Additionally, it is also recommended to check the claim settlement ratio of your insurance company as it reveals the reliability to settle claims.

Checklist for Multiple Term Insurance Policies

After establishing the benefits of multiple term insurance plans, here are the important things you need to be mindful of before making the investment:

  • Analyse your current financial standing, and if you have several liabilities such as a home loan, business loan, etc. it is prudent to invest in more than one term plan
  • Identify your financial goals, and if they are more than one, such as planning for a child, wealth creation, retirement planning, etc. then multiple term insurance plans can help you get closer to your objectives
  • Consider the investment of additional cost and time for managing multiple policies

Edelweiss Term Plan for worry-free protection

The Edelweiss Tokio Life Zindagi Plus term plan is an adaptable cover designed to cater to the changing financial needs. It comes with a host of benefits, including the flexibility to choose the suitable premium payment option based on your preference. Additionally, we offer term premium discounts for a high sum assured, and you can enhance your coverage through 4 unique riders. Finally, you can avail of Premium Waiver in case you are diagnosed with a terminal illness.

As a customer-centric company, Edelweiss Tokio is trusted for:

  • Experience in helping you manage your finances for a worry-free retirement
  • Expertise to help you grow your wealth and
  • Innovative offerings to address varying financial needs

To conclude

A diverse insurance portfolio fortifies your financial wellbeing and helps you address the changing financial needs at different stages in life. If you are concerned about spending on multiple term insurance policies, you can invest in the Edelweiss Tokio Life Zindagi Plus plan that offers high sum assured at discounted prices. For more details, get in touch with us today!

 

Siddhant Dubey - Writer & Photographer

Siddhant works as a freelance content writer who is interested in a wide range of spheres from photography and personal finance to cooking. He is also an aspiring photographer striving to showcase life around him through his vision.

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