Kathmandu: When do you need multiple life insurance policies? You may be in dilemma to decide about it. Life insurance provides compulsory saving and risk coverage. It supports nominees or dependents financially incase of death of the insured. Multiple life insurance policies can be purchased from same of different companies.
When do you need multiple policies
The financial liabilities of a bread earner keeps changing over the changes in life stages. On the other hand, the volume of loan or credit facilities enjoyed over time also adds financial liabilities. Hence a single life insurance policy may not be enough to cover all the financial liabilities incase of death of the bread earner of a family. So, one may have to purchase multiple life insurance.
If you don’t have enough earning for endowment plan( a saving plan) then you can choose at least term plan that may be enough to cover all financial liabilities of home loan, car loan, business loan. Unlike endowment plan, term life covers accidental injury and death risk only.
Buying multiple policies
There is limitation of buying multiple policies from the same life insurer. In Nepal, most of the life insurers have set the maximum limit of total sum assured for an individual. In such case, it’s better to opt to purchase policies from different insurers.
Details of all existing life insurance policies need to be provided at the time of filling up the proposal form for a new policy. Income documents need to be provided for the insurance company to assess the need for insurance. The new insurance company may reject the form, if the existing life cover exceeds the human life value estimate which is calculated on the basis of income of the insured up to about 20 times his annual income.
Managing policies
Regular premium payment is a must condition for life insurance policy’s risk coverage. Now a days all life insurance companies provide online insurance premium facilities to the insured. It makes easier to pay the premium on time. If you wish to make any changes in the nominee(s), you have to update the same formally to your insurer.
Point to note
If you own multiple numbers of life insurance policies, then you must maintain an updated record of the same for future reference. You must make your nominees or dependents aware about the life insurance policies you have purchased.
