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Is It Advisable To Have Multiple Life Insurance Policies?

Sep 28, 2018 | 2 years ago | Read Time: 3 minutes | By iKnowledge Team

Is It Advisable To Have Multiple Life Insurance Policies? - Aegon Life

When it comes to multiple life insurance policies, the opinions are divided. Learn whether multiple life insurance policies are beneficial for you or not.

It’s absolutely possible and legal to have multiple life insurance policies at once. Generally, people do have multiple life insurance policies, wherein one is provided by the employer, and the other is through their own term life policy, which isn’t tied to their employment. But it’s possible to have life insurance policies beyond these two, thereby enabling you to spread your coverage across those policies.

Are multiple life insurances advisable?

Having more than two life insurance policies is not advisable if you form the working class personnel. Sure, life insurance companies understand that you want to leave a sufficient amount behind for your loved ones, keeping uncertainties in mind, but you have to be practical when availing these policies. The general rule of thumb advises not to take insurance worth more than 20 to 30 times of your current income, depending on your age and the carrier.

General approach among the masses

Every insurance buyer’s approach is different, and so is their reason to buy an insurance policy. Numerous buyers purchase large term policies to effectively cover the most crucial years, while deploying a smaller permanent policy to cover up for when term insurance expires. On the contrary, other people just need more life insurance coverage. Especially those, who get a bigger mortgage, a significant raise or increased family size, are inclined towards adding to their life insurance protection.

Overcoming the myth

There’s a common misconception that under life insurance, you can only take out one policy, which indeed is not true. People believe that while other forms of insurance coverage do allow multiple policies, the same is not applicable for life insurance.

Insurance settings might differ

Insurance and investment policies differ based upon the circumstances and income groups. We can draw inspiration from a recent example, wherein a mystery billionaire purchased a $201 million dollar policy, which comprised of two dozen individual policies bought from 19 different companies. If this person wasn’t a billionaire and had an average salary, then such an arrangement would be nearly impossible.

 Factors considered by the insurers when deciding the insurance amount

When deciding the amount of your life insurance, the companies will look at your income and liabilities first. Based upon these factors, they will assess the overall need for protection, to determine the amount of life insurance you can purchase. You can add various benefits to the existing plan, and can also avail more insurance if you owe money to the creditors, business or student loans. The carrier may allow even more loan amount in case of children’s college education or special needs.

Business owners have an edge

For entrepreneurs and business owners, they can even get a larger amount and more than a single life insurance policy since they can justify it. Their cause for life insurance can vary between personal use and business.

But does a working class person really need to have more than one policy?

The answer to this question is no. Most individuals, who are simply keen on protecting the family during the most important years, can be okay with one policy. It is rather crucial to focus on the amount of life insurance coverage than the number of policies. After all, you don’t want to run the risk of them being uninsured in case of any mishaps. A fine way to calculate the protection amount required is by using the human life value calculator, which gives you an accurate estimation.

While there is nothing wrong with opting for multiple policies, it is recommended that you get life insurance policies that have certain riders (add-ons) to the existing policies. For instance, Aegon Life’s iTerm insurance plan provides additional benefit by covering your financial liabilities with death benefit pay out. Similarly, there are many tailor-made products designed to offer you additional coverage in case of any uncertainty.

Read about Sabse Pehle Life Insurance Campaign, an initiative by IRDA to create awareness on the importance of life insurance.

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