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Does it make sense to have multiple insurance policies?

Thinking if multiple health insurance policies are feasible or not? Know if it is possible and if it makes sense.
HT Brand Studio Published: 24 Jun 2024, 03:28 pm IST
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As individuals age, their obligations continue to add up. Although a 30-year-old individual may be able to manage a limited Sum insured with a single insurance policy, by the time the individual reaches 50, they may be responsible for a family of four, parents who will be senior citizens, and additional family members. It often seems that a single insurance policy sometimes is not able to accommodate additional requirements associated with age. In this scenario, is it advisable for an individual to purchase additional life and health insurance plans if one can afford them?

Can I have two or more insurance policies?

One needs to understand that the policyholder/insured is entirely responsible for determining their insurance requirements and selecting the appropriate plan. It is absolutely possible to buy and claim two or more life insurance plans. Insurance companies will decide on life insurance premiums by considering factors like income, age, and pay potential.

Even when it comes to getting health insurance plans, the IRDAI allows you to file health insurance claims with two different insurers for the same medical emergency or treatment. However, if you want to do so, you must keep the insurance providers informed of any existing health insurance policies you may hold with other firms. You must also follow the IRDAI-determined criteria and regulations in order to seek health insurance from two different businesses.

Nevertheless, if an individual is thinking of acquiring a health insurance plan or term insurance policy, it is imperative that they disclose their existing two policies and the rationale behind their decision to select the second life insurance plans. It is crucial to maintain the status of active policies by consistently paying premiums when administering two or more policies. Now that most of the transactions are online, handling two or more than two policies is possible.

When does it make sense to have two insurance policies?

Protects you against claim rejection: With two insurance policies, you have the option of requesting your claim even if it is denied by one insurance provider because the chances are high that it may be accepted by another. Additionally, with various life insurance plans, your dependents or beneficiaries would have the choice of receiving the claim amount after your death. When purchasing several insurance plans, you should compare insurance companies’ claim settlement ratios. Though some firms may charge somewhat more than others, there is no harm in paying more for the one with a good claim settlement ratio.

Can get multiple insurance policies with different maturity periods: Rather than purchasing a single 35-year-old insurance policy, you can choose many plans with different maturity periods. This will help you deal with the varying needs that may arise at different phases of your life. The insurance coverage is based on our present liabilities, which change over time. Thus, having various policies with differing coverage allows you to continue or quit your policy based on your needs.

Cost-effective: Rather than purchasing a single insurance policy with a larger sum assured, it is preferable to get multiple plans that add up to significant coverage.

One can get Coverage For More Specific Conditions: If you or someone in your family already has a sickness, getting a health insurance policy with a good return on investment becomes nearly impossible. It would be ideal if you could purchase multiple insurance policies with lower coverage amounts. Furthermore, simple ailments like viral fever can have a significant impact on you and your family. Individually, it may not cost much, but for three or four members, it will be significant. Hence, additional health insurance plans absolutely make sense.

When having Multiple Policies Become a Reason for your Headache

Diversification has its advantages. However, there are a few downsides as well that one should know beforehand:

Premium Overload: The addition of more insurance policies results in increased monthly expenses. Managing a number of premiums and renewal dates can be a burden, and the total expense may exceed your budget. However, this can be managed by setting reminders or automating your payment.

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Coverage Overlap: Sometimes overlapping of coverage can happen when you buy different insurance policies and this results in a waste of money. This can be prevented easily if you thoroughly evaluate your policy coverage

Claims Complications: Managing different claims can be a nightmare for the one and can add stress to the already stressed situation. To ease the situation, understand the claim process beforehand.

What You Should Ideally Do

It is recommended to have a term insurance plan and one additional policy to cover the additional needs that come with a lifestyle and more responsibilities. To minimize hassles and delays, one should avoid applying for too many insurers at the same time and instead consult with an insurance counsellor to verify that he or she is obtaining the right kind of coverage and life insurance plans for his or her needs.

So we are saying

Buying two policies could be useful in a variety of ways. Two insurance policies may be required to meet family responsibilities and financial needs. Furthermore, if one claim is denied, the policyholder can rely on the second. However, opting for multiple insurance policies is not a one-size-fits-all situation. Before adding multiple policies to your portfolio, evaluate your financial objectives, risk tolerance, and current coverage. Consulting with a financial advisor can assist you in deciding your insurance strategy that provides comprehensive protection without your budget getting impacted. It is important to bear in mind that the number of policies you have is not as significant as the selection of appropriate policies to establish a personal safety net.

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