Page 42 - The Insurance Times January 2022

PROS AND CONS term insurance between multiple insurers is also a better
idea when the cover is large. Because, at times, a higher
coverage of say Rs. 1 crore may get delayed in getting settled
at the time of claim whereas a claim for an amount lesser
OF MULTIPLE than Rs. 1 crore may get easily settled. Moreover, based on
the different underwriting policies of each company, the
permitted sum assured amount may vary. For instance if the
TERMS PLANS underwriting doesn’t permit Rs. 1 crore of sum assured
amount due to health conditions, in such a scenario, a person
can opt for multiple term insurance plans to get the desired
amount.

Additionally, if a person, having multiple insurance policies,
feels any burden in paying for term insurance or he doesn’t
T erm insurance is a long tenure-led insurance policy need the high corpus amount by the age of 50 years due to

completion of family duties, then he/she can surrender a few
that ensures that the dependents and family
plans out of the multiple plans without losing the entire term
members of a policyholder remain financially intact
insurance support.
even after the demise of the policyholder.
Also, the insurance industry is constantly evolving and so are
As important it is to buy term insurance, it is equally significant the products being offered. A term insurance product
to sign up for a term insurance policy with the right sum conceived and purchased 20,10 or even 5 years earlier may
assured . The sum assured should be sufficient enough to be a simpler product compared to products with new features
ensure that the regular needs and long-term goals of the currently available. This includes covers for spouse,
family are fulfilled in sync with future inflation. However, it is accelerated payments on critical illness, conditional premium
quite common that one can’t assess the corpus needed at waiver, additional pay out in accidental death, and children
the time of purchase 20-30 years early and may end up benefit riders all available within term insurance plans.
purchasing a term insurance plan with a sub-optimal sum Depending on the evolution of one’s financial/personal needs
assured amount. one can choose a term plan which complements them and
reinforces the existing term plan.
Since there is no top-up facility in term insurance like in health
insurance, the policyholder can add multiple term insurance Loans are another reason to consider buying a new term
plans depending upon his / her needs. It is legitimate in India insurance. Home, business or other long-term loans may have
to have multiple term insurance plans as it comes with various been accrued after the initial term plan purchase. Relying on
benefits such as bigger claim amount, different benefits and original term insurance alone may rob the dependents of
safety for the future. eventual benefits if an additional term loan is not purchased
that is equivalent to home or business loan that are unhedged.
While you plan to go for another term insurance plan, the
applicant can look for a different company to buy their second The term insurance sum assured amount can’t exceed more
plan. Different companies have different features, benefits, than the Human Life Value (HLV) of the policyholder. It is the
inclusions and exclusions. . Thus, it is beneficial to select monetary value of the person based on income, savings and
separate companies for separate plans. However, it is always liabilities. These days, life term insurance companies offer
mandatory for the policyholder to disclose about an existing insurance coverage depending upon the age of the insured.
term insurance plans at the time of taking a new one. For instance, 18-35 years old person can get 25times of their
annual income, 36-40 years old person is eligible for 20 times
Why multiple plans of their annual income and 40-50 years old can get 10-15
While multiple term insurance plans adding to a big cover times of their annual income. The policyholder, however, has
may become a little expensive than a single term insurance to provide proof of annual income to avail multiple policies.
plan, they come with a bouquet of advantages. Diversifying (Source: Business Line)

42 The Insurance Times, January 2022