Can You Buy More Than One Life Insurance Policy?

There is no legal mandate against buying multiple life insurance policies – and if you feel the need, life insurance companies will not stop you from buying more than one life insurance policy. You might already have an existing life insurance policy but might consider buying other ones at the same time or at a later stage in life. But in what situations will buying multiple life insurance coverages benefit you? And what are the implications of buying several life insurance policies? Read on to find out.

In What Scenarios is it Wise to Buy More Than One Life Insurance Policy?

There are various benefits of life insurance, but the core purpose of life insurance is to provide financial support and an avenue for security and growth in some form or other. Buying more than one life insurance policy only makes sense when there is an actual need or requirement corresponding to it. Here are some scenarios where buying more than one life insurance coverage makes sense.

• When your responsibilities grow

  When your responsibilities grow in life, and you need extra financial assistance to fulfil those duties, you can buy more than one life insurance policy. For instance, when you are 30 and single, a single life insurance policy can be enough to fulfil your individual goals. But when you are 40, with the added responsibility of a working/ non-working spouse, children, and even your ageing parents, you might need separate life insurance policies to take care of those varying needs.

• If you have several ongoing debts

  Let’s say you are a young, working professional just a few years into your career. You want to own a car/ vehicle, and for that, you take a car loan. And to secure that car loan, you take life insurance. Ten years down the line, you realise you want to own a home, so you get a home loan. Now, you have another loan to your tab and the existing life insurance policy you have will not be enough to secure both loans. In that case, you apply for another life insurance policy.

  There are many other instances in life where you realise you have different goals, and a single life insurance policy will not suffice. This is why insurers offer different life insurance types that help you fulfil different goals like:
  

  • Growing income for your child’s education/ marriage (Child education insurance )
  • Creating long-term wealth for your retirement (Retirement/ pension insurance)
  • Leaving a financial legacy for your family (Unit-linked/ savings plan insurance)
  • Receiving financial support on death and unforeseen medical emergencies (Term insurance)

   

What are the Factors to Consider Before Buying Multiple Life Insurance Coverages?

Here are the factors to consider before buying multiple life insurance plans:

• Hike in life insurance premium prices

  One of the foremost factors you need to consider before buying another life insurance policy is the price hike in your life insurance premium. More life insurance policies will give you the life insurance coverage you require, but it will also mean you need to set aside more money than you do for regular premium payments. Besides, keeping track of multiple policies and their premium payments can be inconvenient.

• Exceeding the insurability limit

  There is this concept called the life insurance insurability limit in life insurance – it is the maximum amount of life insurance coverage you can get. The insurability limit varies from insurer to insurer but usually ranges between 10-20 times your annual income. If your life insurance policies exceed the set limit, it is not possible to get more life insurance.

• Claim rejection and fresh underwriting

  If you buy more than one life insurance policy only to hedge yourself against the risk of claim rejection, always remember there is no guarantee that you will be doing so. The general rule is that if your life insurance policy gets rejected due to some reason, another insurer will become aware of it because of being well-connected with other insurance companies. You will also have to undergo fresh medical tests and underwriting each time you buy another life insurance policy.

Conclusion

Buying your second or third life insurance policy is always a more thorough decision – give it proper thought and assess your needs before finalising purchases. To know more about term insurance, term plan, wealth plan, long term savings and more visit PNB MetLife website.

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