Death Claim: Is It Possible To Claim From More Than One Life Insurance Policy

• Premiums as low as Rs.17/day for sum assured of Rs.1 crore*
• Claim up to Rs. 1,50,000 deduction under section 80C**
• Choose between annual and monthly premium payment options

There might come a time when you realise that the life insurance policy that you purchased does not offer sufficient coverage. Usually, during key events in one’s life such as one’s wedding, the birth of one’s child, etc., many policyholders might want to enhance their life insurance coverage.

If you are looking to purchase a life insurance policy or if you have already purchased a life insurance cover for yourself, it is necessary to know that it is legal to purchase another life insurance policy at a later point in the future. In the event of the life assured’s untimely death, the designated nominee will be able to claim the death benefit from all policies that the life assured had purchased, subject to certain conditions.

What is the Death Benefit?

The death benefit is a certain guaranteed sum of money that is paid to the nominee appointed by the life assured if the latter happens to pass away during the policy tenure. The death benefit amount is usually equal to the sum assured chosen by the policyholder at the time of purchasing of the policy. Thus, in the event of the life assured’s death, his/her nominee will have to raise a death claim with the insurance company. The insurer will verify the claim and the supporting documents submitted by the nominee, after which the death benefit will be paid out to the nominee.

Things to Keep in Mind

As mentioned above, policy buyers/policyholders can hold more than one life insurance policy at the same time. However, there are a few things that you will need to keep in mind if you are planning to purchase a second life insurance policy.

• Disclose the Necessary Facts to the Insurer: If you already have a life insurance policy and are looking to purchase another policy, it is necessary to let the insurance company know about the first life insurance policy and the coverage it provides. This will also help the insurance provider offer you the right insurance policy that can extend your coverage, as per your financial goals and requirements. Not informing an insurance company about your previous life insurance policy can cause insurers to reject your nominee’s claim due to non-disclosure of facts or misrepresentation of facts.
• Human Life Value: When you purchase a life insurance policy, the insurer will ascertain your Human Life Value (HLV). The HLV is indicative of the expected earnings of the individual over his/her lifetime. A policy buyer cannot opt for a sum assured that is more than the ascertained HLV. This also applies to individuals who hold more than one life insurance policy. Thus, the combined sum assured/death benefit amount of all your life insurance policies cannot exceed your Human Life Value.

Benefits of Purchasing more than One Life Insurance Policy

The key benefits of purchasing more than one life insurance policy are as follows:

• Protection Against Claim Rejection: Although small, there is always a chance that your claim could get rejected by an insurance company. To lower the risk of claim rejection, it is a good idea to purchase over one life insurance policy. For this to work best, you should consider purchasing life insurance policies from different insurers.
• Option to Choose Different Maturity Periods: When purchasing a second or a third life insurance policy, you can always opt for a different tenure and maturity date for the second policy so as to let the payouts from the different policies coincide with the important milestones in your lives.
• Option to Purchase Different Types of Life Insurance Products: Many individuals, when they are young, opt to purchase term insurance policies. However, at a later stage in your life, you might realise that an endowment plan or a money-back plan would be more beneficial. In such a case, instead of cancelling/surrendering your first life insurance policy, you can purchase a different type of life insurance product the second time around.

While purchasing more than one life insurance policy might seem like a good idea, it is important to remember that your payable premium is also likely to increase if you have more than one life insurance cover. Also, many life insurance policies offer policyholders the option to enhance the sum assured during key milestones in their lives. Thus, if you wish to enhance your coverage, it is best to first check if your policy offers this option.