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Have Multiple Life Insurance Policies? Here are 5 Things You Should Know!

Have Multiple Life Insurance Policies? Here are 5 Things You Should Know!

Multiple Life Insurance Policies

Would it be wrong to own a fleet of cars for your family? Certainly not if you can afford it. Same goes for life insurance policies too. You can hold as many as you can afford. But there is one fundamental difference.

You could own a number of cars as a collector or if you are planning to run a cab service. But life insurance is not a thing for enthusiasts or inventory to start commercial service. Then what are the circumstances where holding multiple life insurance policies makes sense?

It is perfectly legal to buy multiple life insurance policies and your family will not face problem in filing multiple claims. However, here is a list of five crucial factors you should keep in mind:

Covering Multiple Liabilities

Buying multiple life insurance policies makes sense if you have multiple loans running. For example, if you have a home loan of Rs. 40 lakhs for 20 years and a business loan of Rs. 20 lakhs for 10 years, you can buy three life insurance plans:

  • One for 20 years and with a sum assured of Rs. 40 lakhs
  • Another for 10 years with a sum assured of Rs. 20 lakhs
  • The third policy would be a term insurance plan with a sum assured as per your family’s financial need and lasting at least till your retirement

This way you can cover both the liabilities as well as continue the protection of your family with a term plan.

Most lenders advise buying reducing term insurance which is linked to your loan balance. While it is better than not insuring the loan at all, you should keep in mind that this insurance policy will only take care of the remaining loan amount.

Invest In Different Life Goals

This is the most common cause of holding multiple life insurance plans. If you have multiple life goals, life insurance companies in India offer at least one plan for each of your goals. With all the variety available, you’ll see, holding more than one life insurance plan may just come as a natural choice.

Choosing Life Insurance Plans

Is There Cover of Covid-19 Infection in Regular Health Insurance Policy?

According to guidelines issued by the IRDAI (Insurance Regulatory and Development Authority of India), all the claims related to Covid-19 treatment (including quarantine period) will be eligible to gain coverage under a standard health plan. It will be there to help the insured with the normal cover on hospitalization for all viral infections, including Corona. All the features you enjoy under your chosen health insurance plan will also apply to Covid-19 treatment. But to avail treatment through your medical insurance, you must be hospitalized at least for 24 hours. In the event of hospitalization, all your expenses will be covered for treatment of disease, including pre and post hospitalization expenses.

Increase/Reduce Cover with Age

As you age two things happen:

One: Your family and income grows, which means you can buy more insurance

Two: Your life insurance need reduces if you are accumulating assets

You can choose whichever way you want your life cover to tilt. However, given the low cost of term life cover, you can easily choose to increase the life cover, instead of reducing it. Now there are two ways you can achieve this:

  • Buy a new term life insurance as your eligibility and responsibility (family) grows
  • Buy a term insurance plan which allows life-stage increments in sum assured

Canara HSBC OBC Life’s online term plan iSelect Star offers the second option to you. Life-stage increment option can save a lot of hassles for you as your family grows. Some important points to note:

  • Avoid the full underwriting process being an existing customer
  • Enjoy a discount on premium

Increase life cover upon three crucial life stages:

  • Marriage
  • 1st Childbirth
  • 2nd Childbirth

Thus, you do not need multiple life insurance plans to take care of, at least, your growing life cover needs.

Limit of Human Life Value

You can buy as many life insurance policies as you want but, you should take care of the limit imposed by the human life value (HLV) estimate. HLV is based on your income and can go up to 20 times of annual take-home income.

While buying a new life insurance policy, the life insurance companies will always ask you about your existing life insurance plans. The insurer may reject new life cover if your existing life cover equals or exceeds this limit.

Cost of Managing More Policies

Another factor to keep in mind is the effort and time needed for managing multiple policies. Also, your total premium cost may rise if you are buying similar policies with some time gap. If you are investing in multiple life insurance plans for any reasons, you can use E-insurance account to manage your policies in one place.

E-insurance account is similar to a d-mat account, where you can see and manage all your insurance policies. E-insurance account enables you to organise your multiple life insurance policies and you can even file service requests except for claim settlement.

Hedging Against Claim Rejection

Before we close, there are many articles claiming that multiple life insurance policies provide you with a hedge against the possibility of claim rejection by one insurer. While there could have been some truth in this statement, modern life insurance companies in India are well connected.

Modern technology helps them not only underwrite risks more accurately but also settle the claims faster. Therefore, if one insurer finds enough reason to reject your claim, the possibility is that the other insurer will follow the suit.

So, the best hedge against claim rejection is not multiple life insurance plans, but accurate disclosure of relevant information.

Your reasons for buying multiple insurance plans may differ, but at the end of it your objective should be relevant and clear, such as meeting your financial goals.

Speak to an insurance specialist now!

Frequently Asked Questions (FAQs) Related to Life Insurance Policies

The premium is one of the most important factors to consider before buying a life insurance policy. Many people buy a life insurance policy with a high sum assured but are unable to process the premiums for the entire premium payment tenure. You can get a better idea of the premium outgo with the premium calculator available in the 'Tools and Calculator' section of www.canarahsbclife.com.

Life insurance plans come with several riders which increase the efficiency of the policy for the buyer. For instance, if you have a history of terminal illness in your family it would be advisable to opt for terminal illness rider with your term insurance plan. Riders or add-ons help in customising the standard policy benefits for the requirement of different families. The iSelect term insurance plan comes with a built-in cover for terminal illness, and option for protection against accidental death or disability. You can also opt to cover your spouse's life under the same policy by paying an additional premium.

Life insurance companies calculate the premiums based on several factors such as age, gender and occupation.

Age: It is one of the biggest factors that influence life insurance premiums. Premiums tend to be low when the life insured is younger as the chance of contracting diseases is low. Young people also opt for the best life insurance policies with longer tenures and pay premiums for a longer duration, which makes the policy cheaper for young people.

Gender: The insurance premium for women is generally lower when it comes to life insurance plans. Women live longer and pose a lesser risk of a claim leading to lower premiums for them.

Lifestyle habits: The premiums for people who smoke or drink is always higher due to higher health risks.

Policy term: Policy terms are also taken into consideration by insurers while deciding the premium amount. Life insurance policies with longer tenure are cheaper as compared to short-duration policies.

Mode of purchase: The platform that you use to buy the best life insurance policy also determines how much you will have to pay for the plan. People who buy life insurance policies online have to pay lower premiums as compared to offline policies.

Occupation: The nature of your work is an important factor that influences the premium amount. Certain occupations like shipping and mining are considered more dangerous as compared to jobs in services industries. The insurance premium rises with the risk profile.

Processing life insurance claim is a transparent and smooth process with Canara HSBC Oriental Bank of Commerce Life Insurance.

In case of the death of the life insured, the nominee will have to intimate the company by filling a Death Claim Form and sending it to the nearest branch office.

Once the form is received, the claim is registered by the insurer.

After the registration of the claim, the company will send the claims pack along with the related forms such as physician’s statement form and employer certificate that need to be filled.

Along with the duly filled forms a few documents such as original [policy document, death certificate, copy of bank passbook, hospital or treatment records, photo identification and address proof have to be provided.

The claim is processed on the submission of relevant documents. Once the documents are verified, the claim amount is released post all due diligence.

Household expenses rise with age. The cost of children's education increases along with other lifestyle expenses. The iSelect term plan offers an option to increase the cover according to the life stage. If opted, the insurance cover increases by 25% at every 5-year terminal till the 20th policy year.

Even though a life insurance policy is bought to protect your family in your absence, there are chances of the claim being rejected due to several factors.

False information: If the policyholder provides false information or conceals important information while buying the life insurance policy, the insurer has the right to reject the claim after his/her death.

Type of death: Deaths due to suicide in first policy year, intoxication or pre-existing disease is not covered under life insurance plan.

Premium payment: The payment of premiums on time is of utmost important to avail the benefits of life insurance. Life insurance policy may lapse on the failure to pay the premiums

Nominee details: A life insurance company can put the claim on hold if the nominee details have not been filled or not been updated by the policyholder.

Suicide: If the life insured commits suicide within 12 months of buying the life insurance policy, the insurance companies generally pay 80% of the total premiums paid.

Buying the best life insurance plan online is not only safe but a better option. Online life insurance policies have lower premiums and the individual is not required to visit the insurer's branch or a bank. The best life insurance policies online insurance offer higher benefits. Customers should, however, buy online life insurance policies only from credible insurers and should check for SSL certificate on the website to ensure that the website is legitimate.

The cost of life insurance policies varies depending on factors like age, gender and occupation. The average cost of life insurance plans, especially term plans, is very low compared to the amount of coverage offered.

An individual is allowed to have multiple life insurance policies. People opt for more than one life insurance policy to increase the cover or avoid claim rejection. In case of multiple life insurance policies, even if the claim is rejected by one insurer, the beneficiaries may receive the benefit from a different insurer.

Life insurance policies are of different types. In case of unit-linked or endowment policies the policyholder receives the maturity benefit at the end of the policy term. However, in the case of term insurance plans, there are no maturity benefits. The death benefit is only paid out after the death of the life insured.

When you buy a life insurance policy, the insurance company asks for the nominee details. Only the person named as the nominee in the life insurance plan can cash out in case of death of life insured.

A life insurance policy is generally taken for a specified period. After the policy duration of a term plan gets over, the policy simply terminates and ceases to exist. However, in case of unit-linked plans or endowment, you can use the policy as a tool for retirement planning and the accumulated corpus is used by the insurer to pay you monthly amounts for your entire life.

If a policyholder purchases a term plan for 25 years and dies during the policy term, the beneficiary receives the death benefit. In case of iSelect term plan, the policy provides four payment options to the beneficiaries. If the regular payment option is chosen, the policy works as a source of regular income.

It is a popular misconception that life insurance plans are only for accidental deaths. A term life insurance plan like iSelect Star Term Plan also covers terminal disease along with death. A terminal illness cover is important as health insurance pays only for the cost of treatment and hospitalization, but a terminal illness cover pays you a lump-sum amount which takes care of other expenses. On the other hand, unit-linked policies such as Invest 4G cover death and also provide decent returns for other financial goals such as buying a house of child's education.

It is ideal to buy a life insurance plan in your early 20s because it is the time when people have just started with their professional life and so there are lesser responsibilities and financial liabilities to take care of. Also, if you buy the best life insurance plan at this age, you will be paying relatively lower insurance premiums since it’s a due fact that mortality rate in case of young people is low. And that is why life insurance companies offer lesser premium rates to younger people as they think that they are most likely to be fit and healthier with less chances of filing a claim in future.

Once you have cancelled your life insurance policy, you will instantly lose your life insurance cover. Afterwards, your insurance company will get in touch with you and ask for valid reasons regarding the cancellation of your policy. In case you cancel your life insurance policy within the grace period, i.e. 15 to 30 days, depending on your insurer, then insurance company will reimburse the premium amount paid by you. But, no refunds will be paid to you if the policy is cancelled after the grace period.

Yes, you can take life insurance under Married Women’s Property (MWP) Act, 1984 only if you are a married man and a resident of India. Buying a life insurance plan under MWP Act would be helpful in saving your family’s financial well-being when you are not around. As per this policy, only wife and children would be eligible to receive the death benefits. You can also buy a policy if you are a widower or a divorcee. However, in that case, you can give your child’s name as your beneficiary. It is very simple to buy a life plan under MWP Act. All you need to do is to fill up an MWP addendum while purchasing an insurance policy.

Yes, there are different payment options for you to pay premiums. Here’re some of them

    1. Regular premium payment option – This premium payment option allows you to pay premiums equal to your policy term either monthly, quarterly, half yearly or annually.

    2. Single payment option – Through this premium payment option, you can pay the lump-sum amount in one single payment.

    3. Limited payment option -In this premium payment option, you can pay premiums for a specific period of time less than policy term either monthly, quarterly, half yearly or annually, but benefits of insurance can be enjoyed for a longer period of time.

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