Can One Invest in 2 Term Plans Simultaneously?

A term insurance plan can help secure your family’s financial future by providing coverage in case of unforeseen events. So, is one term insurance enough for the changing needs of your family? Not really! Hence, you must have a strong plan that will take care of them even when you are not around. 

Wondering if you can hold more than one term insurance policy at a time? Experts say yes because one term plan may not cover a person's needs at various life stages, especially when the future is uncertain. Term insurance is typically a pure protection plan designed to provide financial support to your family in your absence.

Let us delve into the nuances and benefits of taking this step.

Term insurance is a pure protection plan that offers you coverage for a certain period. In case of your sudden demise, your nominee gets a substantial amount of money. If you are the sole breadwinner of the family, you must sign up for one. This ensures that your family’s financial needs will be taken care of even if you are not around. 

Want to sign up for more than one term insurance plan? It is totally possible, as there are no restrictions on this. In fact, it has several benefits, such as: 

• Solution for Evolving Financial Responsibilities

As life progresses, your responsibilities grow and evolve. Hence, the term insurance that you signed up for at a young age may not cover the needs of your growing family. Having more than one term insurance plan gives you additional coverage and secures your family’s financial future. 

• Diversification of Risks

Relying on a single term insurance to safeguard your family’s finances? There have been incidents where the claims have been rejected, and the nominees have not received any benefits. Hence, holding term insurance with more than one company ensures that even if your claim gets denied with one firm, there is still a backup plan. 

• Customised Coverage Duration

You may face different financial commitments during various phases of your life, such as children’s education, mortgage, etc. Investing in multiple term plans allows you to choose them according to your varying needs. Some insurers offer return of premium options, where you may receive back the premium paid if the policyholder survives the term. 

• Enhanced Coverage with Diverse Riders

Want to get additional benefits and coverage with your term plan? Signing up for multiple term plans can help you with this. As your family grows, diverse term insurance can give you a chance to add your members to the plan. 

Some term insurance plans allow you to add your spouse and children to the policy for extended coverage. You can also add an accident and health insurance rider to this policy. 

Holding multiple term insurance plans comes with its fair share of benefits. But it has some disadvantages, too. These include: 

• Increased Premium Costs

When you sign up for more than one term plan, you have to pay a premium for each on a monthly, quarterly, or yearly basis. This requires meticulous planning to avoid financial strain. Additionally, failing to pay the premium may cause your policy to lapse. 

• Complex Policy Management

Have more than one life insurance policy? This is a great idea to secure your family’s financial future. However, keeping track of the premium due dates, policy terms, and beneficiary details requires diligent management. Mismanaging these can lead to lapsed policies and missed benefits. 

• Cumbersome Claims Process

While claiming multiple term plans, your beneficiaries will have to separate claims for each policy. This can be a time-consuming process and can be difficult during a challenging period. 

Planning to sign up for one more term plan? Consider these factors to make an informed choice: 

• Understand the Human Life Value (HLV) Assessment 

There is no restriction on the number of term insurance plans you can hold. But do you know that there is a limit set for Human Life Value (HLV)? This calculates the total insurance you need depending on your income, expenses, etc. Irrespective of the number of term plans you hold, the total sum assured should not be more than your HLV. When you apply for a second term insurance plan, the company will check this before issuing you a term plan.

• Consider the Premium Amount

Signing up for multiple term insurance plans means you have to pay the premiums on time to ensure they do not lapse. So, calculate the total premium and check if you can afford this amount. 

• Know the Claim Settlement Ratio

Signing up for more than one term plan to reduce the chances of rejection? Diversify your choices across companies based on their CSR or claim settlement ratio. You can evaluate insurers based on their Claim Settlement Ratio (CSR) as published by IRDAI. 

• Disclose Existing Policies

While applying for a new term plan, you must disclose the details of the existing term plans that you hold. Not doing this can lead to the rejection of your claims and even lead to legal issues. 

Conclusion

You can invest in multiple term insurance policies and take a strategic approach to comprehensive financial planning for your family. However, do not take this decision without sparing some thought on it. Consider the pros and cons before signing up for multiple policies. While the financial security of your loved ones is important, any step that causes a burden on your current economic situation should be reconsidered. Opt for the term plans for Canara HSBC Life Insurance that allow you to add riders to your existing plans as per your changing needs.