Term insurance policies offer life insurance coverage for a designated period or “term”. The key feature of a term policy is that it offers death benefits to the nominees of the policyholders in the event of the untimely demise of the policyholder during the insurance tenure. If the policyholder survives during the period of his/her term insurance policy, there is no maturity benefit offered under the term insurance plan.
In order to ensure a robust financial cover for their loved ones, a lot of people opt to buy more than one term policy. Buying multiple term policies is perfectly legal as long as
- You have disclosed the information about your existing insurance policies before buying a new one
- The combined maturity value of all these policies does not exceed the policyholder’s Human Life Value.
Having more than one term insurances offer several benefits, such as
Protection against Claim Rejection
In case of claim rejection with one of your term insurance plans, the second insurance policy can act as a hedge for providing financial relief to your nominee. Also, there have been unfortunate cases, where an insurance company has gone under, leaving the policyholders or their beneficiaries in a financial lurch. In such cases, your second term plan can offer financial security.
Laddering On the Premium
Laddering is a technique where a policyholder buys multiple small insurance policies, in an effort to save on the premium amount. The key concept behind laddering is that our financial needs change over time. Earlier on in your career, when your financials are not in order, the need for taking out a life insurance for your loved ones is high. However, if you cannot afford the high premium, you can get a collective robust insurance plan by laddering on small insurance policies. As and when you make financial progress, you can either opt to combine these insurance plans or buy a new term insurance with a higher premium.
Opportunity to Enjoy Additional Riders
Different term plans offer different additional rider term insurance benefits. The add-on benefits covered in one plan may not be offered in another. Thus, in order to enjoy the maximum additional rider coverage, you can opt to buy for more than one term policy.
Option to Convert Into Permanent Policies
Some term insurances can be converted into permanent life insurance policies. Suppose you have multiple term insurance policies but feel that you have amassed enough assets that can offer financial support to your nominee in the unfortunate event of your death. In such a case, you can opt to cover one of your term insurance plans into a permanent life insurance policy. This way, you can enjoy monetary benefits upon the maturity of the insurance policy, as opposed to no monetary benefits on the maturity of a term insurance plan.
Things To Consider When Buying Two Term Plans
- When you buy more than one term insurance plan, you have to pay more than one premium amount every month. Make sure that you can afford to pay these multiple premiums to avoid either of your term insurance plans from being lapsed.
- Keeping track of more than one term plan could become a tiresome process.
While there is no restriction on the number of term insurance policies that you buy, make sure that you do not go overboard with buying these policies. Buying more than one term insurance plan should dwell well with your future financial goal.