Can I Have More Than One Life Insurance Policy?

Term insurance has helped many families maintain their lifestyle even in the absence of the family's sole earner. This plan helps ensure financial security and can offer a high sum assured at an affordable term plan premium.

Many people get confused when selecting a cover for their term policy because they are not sure whether they can buy multiple term plans. You can buy as many term plans as you need, as there are no restrictions. Read on to find out, ‘can I have more than one life insurance policy?’ 

When can having more than one term life insurance policy help?

Having multiple life insurance policies can help in the following situations:

• If your claim gets rejected by one insurer: Sometimes, your nominee’s claim might get rejected due to various reasons, like incomplete paperwork, submitting inaccurate information on your health history, a poor claim settlement ratio of the insurer, etc. In these circumstances, having multiple term plans can offer your loved ones more protection. With multiple life insurance claims, at least one is bound to come through and aid your family in the future.
  
  

• If your plan does not allow customisation: A person’s life and needs change every now and then. Many people buy a term policy when they are young, as the premiums are low for young people. They might not be married or have children at this time. However, as they grow older, get married, and have children, they might require higher cover. With age, your family’s requirements are expected to alter too. If your plan does not allow you to increase your coverage, you can consider buying another life insurance plan.
  

• If you want better benefits: Not all term plans offer additional features like riders¹. For example, optional benefits like the critical illness rider¹ can offer your health insurance under your term plan. If you do not find such an option in your existing term plan, you can buy another one.
  

What happens when you have more than one term life insurance policy?

Having more than one term insurance plan can offer you the following benefits:

• Increased security: The more plans you have, the more secure your family is. Having multiple life insurance policies can ensure that your loved ones always have a financial security. Regardless of whether their claim gets rejected, the insurance company shuts down, or they end up losing the insurance papers, they will always have a backup option.
  
  

• More money: A more than one term policy means more money for your family members. They can use this to purchase a house, travel, pay back the debts, study abroad, start a business, and so much more. They can live a comfortable life for a long time to come and not have to worry about their expenses.
  
  

• Peace of mind: Having multiple life insurance plans can also ensure peace of mind. Your family members do not have to chase the insurance company in case of claim rejection. They can relax and use the funds from the other insurance plan. This way, you can live a stress-free life, knowing your loved ones are safe in your absence.
  
  

However, you can also find certain drawbacks associated with multiple life insurance policies, such as:

• High premiums: The cost of purchasing more than one life insurance plan can be high. The more plans you buy, the higher is the burden of paying premiums. This can force you to cut down on other essential expenditures.
  
  

• Tracking premium payments: Remembering the premium payments schedules of each plan can be hard and confusing. If you miss the due dates, you may lose your policy, resulting in a significant loss for you and your loved ones. 
  
  

Should you have more than one life insurance plan?

A term life insurance policy can secure your family members, but it also comes at a cost. Hence, it is important to check all associated expenses of having multiple term policies. Living a restricted lifestyle in the present just to save for your loved one’s future can leave you frustrated and anxious. Hence, you should only buy multiple life insurance plans if you can afford to.

Another thing to remember is that the total sums assured should not be more than the Human Life Value (the value of a person’s life in financial terms). This is calculated by the insurer. If the sum assured exceeds your HLV, the insurance company can refuse to sell you another plan.

In addition to this, you should also try to ascertain your family’s needs in detail. Some experts recommend multiplying your gross income by 10 to determine the coverage for a term insurance plan. So, if your annual income is ₹10,00,000, you would require a minimum coverage of ₹1 crore. Such a sum is considered adequate for most families and can cater to requirements, such as higher education, debt payments, routine lifestyle expenses, etc. 

Moreover, most term policies offer an amount as high as ₹1 crore. For example, Tata AIA Term Insurance plans offer a high sum assured at affordable rates. Additionally, Tata AIA Life offers the flexibility to increase the sum assured at crucial life stages with the ‘Life Stage Benefit’ to match your policy payouts with your rising needs.

If you can get such a high coverage with one plan, you do not require another life insurance policy. However, if you find it hard to buy one large cover, you can invest in multiple term plans.

Conclusion

Choosing more than one term insurance plan should depend on your present needs and your ability to manage the total cost. It is important to think about your family’s long-term goals and the financial support they may require in your absence. It is also important to check how much coverage an insurer may allow based on your financial profile. A single plan can be enough for many people but using more than one plan is also possible when the required cover is higher.