Pros and Cons of Having Multiple Life Insurance Policies
As a responsible individual we always double-check things to eliminate risks. You might think the same with your insurance policies. As insurance offers financial support to your family after your death, you must be thinking of choosing multiple insurance plans to secure your family’s future.
Insurance policy certainly can’t fill up the gap left by you but it offers your nominee lump sum death benefit that gives them strength and time to fight back the crisis.
At present there are many types of insurance policies available in the market. You can compare and choose from them after evaluating your and your family’s requirement thoroughly. Insurance policies are primarily of two types – whole life insurance and term Insurance. The first one is the general life insurance that offers sum assured at your death to your nominee. It also comes with “cash value” component which is given to you with some interest when policy tenure ends. Whole life insurance encompasses other sub-categories like traditional whole life, universal life, variable universal life and variable life insurance.
Term insurance is structurally very simple to that of whole life insurance. You can choose the time of tenure depending on your need. Premium rate of term insurance is comparatively lower than whole life insurance. Term insurance is typically suitable for those who can’t afford high premiums but need vast coverage. It does not have any “cash value” component. Death benefit is offered to the beneficiary only death of policy-holder occurs during the tenure.
Here we will try to give you an overall picture of the pros and cons of having multiple insurance policies that you must know before you take your decision.
Single life insurance is not at all sufficient to meet all your criteria. Therefore, you have to go for multiple insurance policies that will give you complete cover from any sort of financial crisis. It is not just enough to take life insurance policy that will give you huge fund when policy tenure ends. To combat high expense of medical treatments, you must opt for medical insurance plans too. If you have elderly persons in your family, then also insure them with mediclaim plans. All these insurance plans are eligible for tax rebate under Section 80C of Income Tax Act.
Insurance policies are not that much profitable from investment point of view. Although they can offer you some tax benefits but they also claim big portion of your saving. When you have opted for multiple insurance plans, you have to remember their premium payment dates individually. Managing multiple plans can be a bit difficult for you as it involves greater understanding of each plan. No life insurance comes at free of cost. If you have taken multiple insurance plans, then you must be prepared to pay lump sum at a regular interval. Different plans from different companies may deteriorate the situation more as it indicates lots of paper-work to be done. Never ever choose too many term insurance plans for sake of extra death benefits. No term insurance is designed to have “cash value” component which means you will not get any money once the term ends.
Life insurance is a very important instrument to lead a tension-free life. But it should not be a burden for you that you can’t bear in long term. Hence you must design your insurance plan in parity with your financial status. Also keep in mind that life insurance offers great financial benefits to your family after your death. You might not be able to directly enjoy them but it surely shows your love and care for your immediate family members.