Life Insurance

Does Buying Multiple Life Insurance Policies Make Sense

Nov 15, 2021

Does Buying Multiple Life Insurance Policies Make Sense?

People often wonder if it’s possible to buy multiple life insurance policies. The truth is that not only is this possible, but it’s also a good idea to invest in multiple life insurance policies. There are many reasons for doing it as well. So, first things first, it is absolutely legal and possible to have more than just two life insurance policies. 

Those who are willing to make such an investment read on to find out if buying multiple life insurance policies is right for you.

Why You Should Buy Multiple Life Insurance Policies?

When you start your life, you might have a lesser requirement of insurance coverage, since the liabilities and number of dependents are usually lesser. However, as you age, your requirement for a Life Insurance Policy and higher coverage would also increase. Also, your disposable income might not be very high in the initial few years of your working life. However, when it rises, you may choose to enhance your life insurance coverage, and wisely so. 

Here are the top 5 reasons why you should buy multiple life insurance policies:

1.Enhance coverage

If you had opted for your first life insurance plan early in life, please remember to continue the same as long as you can because your premium would have been the lowest then. The older you get, the higher is your life insurance premium. 
So, if you wish to increase your coverage, any time, you can simply opt for another life insurance policy without stopping the first one.

2.Loans/Collaterals
Loans and Life Insurance pledging as collateral is another important factor in buying a life insurance plan, especially an endowment plan. So, if you wish to opt for a loan and use your life insurance policy as collateral, you can always enhance your coverage by availing of another policy.
 

3.Different types of life insurance policies: 
There are various types of life insurance plans to opt for. So, if you already have a Term Insurance Plan for pure coverage, you can then opt for an Endowment or a Money Back Plan for guaranteed return savings oriented portfolio and then opt for a Unit Linked Insurance Plan or ULIP for a market-linked investment-oriented portfolio. So, all types of insurance plans have different purposes.

What this essentially tells us is that different people have different reasons for buying multiple life insurance policies. It is generally not advised for people from the working class to avail such multiple policies as it could cause considerable financial strain.

Types of Life Insurance Policies You Can Buy

There are scores of options out there for those interested in purchasing multiple life insurance policies provided you meet all the necessary criteria. The different types of life insurance plans that you buy are:

  1. Term Insurance Plans: 
    For your protection or coverage requirement as term plans are the cheapest way to get the highest coverage.
  2. Endowment Plans: 
    For wealth accumulation over the long term along with tax saving returns as a guaranteed oriented plan.
  3. Money-Back Plans:
    For guaranteed investment opportunity along with the pre-defined schedule for payment in order to meet regular liquidity requirements.
  4. Unit Linked Insurance Plans:
    For wealth accumulation along with market-linked investment opportunities along with tax-saving returns.
  5. Annuity Plans:
    Pension Plans are to cover the risk of living too long so that you can avail annuity after the vesting age for retirement purposes.

Points to note:

  1. It is a better idea to invest in multiple insurance plans that offer different maturities instead of buying a single 30 or 40-year insurance plan. This would help you fulfill different financial requirements at different points of time with different maturity schedules.
     
  2. Tax Benefit is a benefit of life insurance plans but not the reason to avail the same. Life Insurance Plans are primarily protection requirements and then tax-saving instruments.
     
  3. To avail of larger insurance coverage, additions can be made to the existing policies.
     
  4. Remember to declare all details about your previous policies while opting for the new one, else there are chances of claim rejection for non-disclosure or misrepresentation of material facts.

For those who can afford it, there are several advantages to buying multiple life insurance policies. Instead of taking the risk of putting all your valuable eggs in one delicate basket, you can invest in several small but sturdy baskets that will offer you unbeatable financial protection.

Some of the top pros of buying more than just one or two life insurance policies are:

  • Purchasing multiple life insurance policies is cheaper than most people think. Many of them cost much less than a really expensive single insurance policy.
  • Investing in multiple life insurance policies offers smart coverage against claim rejection. Sometimes, insurance claims do get rejected and the dependents suffer. To avoid this, buy multiple life insurance policy coverage so that even if a claim is rejected, the other policies may come through.
  • Buying policies that mature at varying intervals can help cover the peak years of your life. This is better than investing in one major policy that may or may not cover everything vital.
  • There are multiple policies that cover multiple needs to meet financial goals at various points in time. 
  • Individual policies can be set up easily for specific purposes.


So, you need to choose the best life insurance coverage for yourself. If that entails different types of policies to meet different financial requirements at different maturities, so be it. There is no such rule or restriction on availing multiple life insurance policies. On the other hand, it is indeed a very good idea to opt for higher coverage with multiple life insurance policies so that the maturity amounts can be utilized effectively instead of waiting for a specific date for the entire maturity.

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