“It’s only human to want more”, stated a tagline of an advertisement of a vehicle brand while demonstrating the various features that come with the vehicle. Not to promote the vehicle but I strongly agree that humans are designed to want more and more of everything. Be it clothes, accessories, cars, gadgets, etc. no one is satisfied with having just one of anything. The same instinct drives people to buy multiple insurance policies be it health or life. While it can be argued that the premium outgo increases with every new addition, yet finding a single plan composite in nature is difficult. Some plans promise certain features while others promise other different and unique ones. As such, any investor is spoiled for choice and ends up owning multiple life and/or health insurance plans.
The article, however, focuses on the question whether it makes sense to invest in multiple plans or not. The answer is a simple ‘yes’ because having multiple insurance plans prove useful in multiple ways. Let us see how:
1.The optimum coverage and affordability – experts always emphasize on insuring oneself adequately so that the amount is sufficient to cover every eventuality. Both life and health plans should be of an amount suited to the investor’s requirements. However, affording such coverage is difficult as high Sum Assured always has high premiums. Buying small plans gradually over the course of one’s life (starting early) is the best solution towards building a strong life cover as affording the coverage becomes easier. Even health plans can be supplemented with good top-up plans or if the employer has provided health coverage, it can be supplemented with another customized plan for a more comprehensive insurance.
2.Lower premiums – believe it or not, but buying smaller policies results in lower aggregated premium than the premium of a policy with high Sum Assured.
3.Better claim settlement probability – sad as it may sound, insurance companies tend to reject claims if any anomaly is found in the proposal form. If not fully, it may so happen that the claim is rejected partially and only a percentage of the original claim is paid. Having multiple plans removes the risk of complete claim rejection as if one insurer does not settle the complete claim, the other insurers may settle a part of the claim and so the policyholder does not stand to lose
4.A comprehensive coverage – it is difficult to find all features in a single plan. With the ever increasing competition in the insurance market, insurers are coming up with unique benefits to lure the investor. So with everyone offering something new, you get to benefit with the option of a comprehensive coverage on your life as well as on health.
5.Diversification of risk/liabilities - In future, if policy holder, wants to reduce his liabilities, he can do so by keeping few policies and cancelling other which are not required.
You must have heard the wise saying, ‘do not put all your eggs in one basket’. The logic that justifies this statement is universal and applicable to our discussion as well. It is always better to have multiple plans so that the coverage amount is optimum and affordable and your claim experience gets somewhat positive. Look for maximum features and benefits and enjoy the benefits of a comprehensive coverage.