Is It Advisable To Buy Multiple Life Insurance Policies?

The benefits of taking out a life insurance policy are well documented; it gives you peace of mind knowing that your financial future and that of your loved ones is guaranteed no matter what unfolds.

But one thing remains a mystery among policyholders and those looking to get insured. That is whether it’s recommended (or even legal) to acquire more than one life insurance cover.

In a word, YES, you can take multiple policies either as a package or separately. It’s an excellent way of customizing your coverage and saving some money.

Why take out several life insurance covers?

Life insurance comes in numerous products meant to take care of different risks and the aftermath of your loss. For instance, if you have outstanding mortgage payments, you can take out a policy to guarantee that your loved ones won’t be thrown out of the home upon your demise.

Further, if you have dependents, you can take out a cover to keep them financially protected after you pass away. So to take care of the two problems in one go, you may opt to buy both mortgage and income protection insurance concurrently.

Is it a must to take out multiple policies concurrently?

You bet it’s not! Although life risks never respect age or time, you can always choose when you feel it’s appropriate to take out any insurance policy whenever you need it.

For example, you might not necessarily require several policies when you’re single and with fewer risks? The real deal comes when you get a family and responsibilities start piling up. At this stage, there’ll be no harm in getting an extra cover, say, income protection.

Whereas purchasing multiple life covers isn’t mandatory, doing so attracts several benefits. Some insurance providers usually offer lucrative premium discounts to clients who opt for bundled-up policies.

Before going for multiple life covers however, you first want to evaluate your risk levels and determine how they may impact your dependents. This enables you to settle for the right cover for your specific needs.

How do multiple life insurance policies work?

Suppose you’ve evaluated your life’s risks vis-à-vis their potential impact on your loved ones and determined that purchasing multiple covers is a wise move. Perfect! Now the next course of action is to learn how the policies work.

Let’s break it down for you:

First is the insurance application process and what it entails.

Here, honesty is key when revealing details about your status quo. Misrepresenting any facts may lead to an inaccurate assessment of your status, ultimately causing you to get a not-so-fitting policy.

Also, note that regardless of the number of policies you acquire, each will run independently. Likewise, the premiums for each cover will be payable separately. And for short-term policies, each expires exclusively and are guided by individual contractual terms.

Remember, life covers usually reduce the payout amounts as you advance in age. As such, bundling up other policies to run concurrently doesn’t affect the reduction rate.

Finally, if you had purchased multiple policies from a single insurer and you pass away, your beneficiaries will need to make back-to-back claims to the sums assured. Conversely, if you had purchased the policies from different insurers, the claim process for each policy will be separate.

What types of life insurance policies can you purchase concurrently?

Below are a few examples of policies you should consider combining when on the market for bundled-up options:

Relevant life insurance

As a business, protecting your employees and their loved ones should always be top of your priority list. The relevant life insurance policy can help you achieve this by setting up a cover for your employees and paying out the benefits to a Trust which then shares them among your beneficiaries.

Over 50s plan

Are you in the age bracket of 50-80 years without a life policy? Don’t worry! The Over 50s plan will cover you even if you have underlying medical conditions.

Family income benefit

Otherwise known as family income protection, this policy provides financial assistance to your family in the form of monthly incomes when you pass away.

Level term life insurance

If you pass away within the covered period, this policy guarantees your dependents financial protection through a lump sum payout.

The Whole of Life insurance

With this policy, your beneficiaries are assured of financial protection regardless of when the risk occurs.

Decreasing term life insurance

Have any outstanding mortgage payments? This policy will clear the balance when you pass away. Its sum assured declines as the mortgage balance reduces with time.

Conclusion

Hopefully, this post has helped you understand what it takes, why, and how to buy multiple life insurance policies. Still have a few things you’d like us to clarify? Feel free to engage us in the comments below and we’ll be happy to help.