Why you need multiple life insurance policies and how to manage them


Life insurance protects the nominees financially in case of death of the insured. One can take more than one life insurance policy across different insurance companies.

Need for multiple policies

During the course of one’s life, while the income of the person goes up, new responsibilities tend to get added. Hence one may have to purchase additional life insurance cover. The insured can hedge the risk of rejection of a claim with one insurance company by insuring life with another insurance company. One may purchase life insurance policies to cover for any loans availed by them such as housing loans.

Buying multiple policies

Details of all existing life insurance policies need to be provided at the time of filling up the proposal form for a new policy. Income documents need to be provided for the insurance company to assess the need for insurance. The new insurance company may reject the form, if the existing life cover exceeds the human life value estimate which is calculated on the basis of income of the insured up to about 20 times his annual income.

Managing policies

It is important to keep your policies alive by regularly paying the premiums. It is also necessary to keep the nominations updated and make necessary changes whenever needed. Opening an e-insurance account becomes handy while managing multiple insurance policies. One can get a one shot overview of all the policies held by the person with this facility.

Point to note

It is extremely important to have an updated log of all the life insurance policies with details such as sum assured and nominees and this log needs to be known to the family members or dependents.

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(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)



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