Each Indian household has a robust internal disaster management system. Grandparents travel with their medicine kit no matter where they go. Parents fully charge their cellphones before going to any event. Chachiji insists on clicking enough photos so that there are multiple options for everyone’s display picture.

And yet. Not every disaster has been prepared for. For example, if you ask your parents whether they have written their will, the answer will be a horrified expression signaling ‘how can you think of our deaths when we cannot?!’ followed by an i-am-hurt-and-annoyed ‘no.’

And yet, planning for the life of your family after your life has been cut short, is of immense importance.

You could be met with an untimely accident tomorrow, and in it’s wake your wife and school children could be left helpless, without any means to support or sustain themselves. The shock would be so intense and sudden that for the first few months, your wife would not be able to work as much as she needs to in order to feed herself and the kids.

Or you could be the lone daughter of aged parents who depend and rely on you. If you were to die tomorrow, they would be bereft of any monetary or emotional help. Are you prepared for this possibility too?

The above scenarios are not meant to frighten you; they are intended to wake you up and get you out and running to buy term insurance plans. And yes, we mean plans- as in more than one. Don’t worry; it’s perfectly legal.

Let’s begin with the basics first.

What are term insurance plans?

Term insurance plans exist to safeguard your family after you’ve died. When the policyholder dies, the money is given to the family. This is known as the death claim and is made according to the terms and conditions of the policy. Though there can be no price tag on human life, this compensatory amount is determined according to the loss in future income. Also, if the person lives on beyond the end of the policy term, no payout is made.

Hence, there are no monetary benefits while you live, but your family is protected through cost-effective premiums because you had the good sense to purchase a term insurance plan. You can have more than 1 beneficiary for 1 insurance plan.

Why multiple term insurance plans?

Extra coverage

You might already have insurance policies that cover you and your family from different angles (health, auto, travel, employer-provided). However, the amount of these will vary, and most of them won’t be enough to sustain your family through the grieving period and beyond.

Purchasing multiple term insurance plans will ensure that apart from the minimum coverage that other insurance plans provide, your family has a firm and durable safety net to fall on should any unfortunate incident occur.

Rejection

It might be that one of your policy providers straight out refuses to make the promised payout at the hour of the need. This can be due to any of the following reasons:

• The company has packed up and gone home
• You supplied incorrect/ inaccurate/ incomplete information when you filled the proposal
• You did not reveal your health history fully

To keep your family safe from being bereft of the amount they need, you must opt for multiple term insurance plans.

To benefit from maturity covers

Some individuals might find it better to derive the best benefit from term insurance plans by opting  for policies that come with maturity benefits for the different stages of  family life.

Maturity benefit is the lump sum paid to you- the insured- after your policy term is over. This means that if you purchased a policy for 10 years, then at the end of the term, you will be paid an amount that equals the premiums paid plus a bonus. You can use this accumulated amount for your child’s education, marriage, travel, post-retirement, etc. by choosing policies that mature at different times.

Be assured the death risk cover comes with a maturity-benefit policy, too. So whether DOA, you and your family will be secured. Prudence would be to invest in a healthy mix of maturity benefit term plan as well as death benefit term plan. It could be a win-win situation for you. You get back the premiums paid if you live, your family gets the sum assured in the unfortunate event where you don’t. Do note that the premium you pay for a TROP plan (Term with Return of Premium) is slightly higher than a pure Term Insurance plan (which covers only death).

To break down large cover into smaller ones

When you purchase term insurance plans that mature at different times, you are essentially breaking down a large cover into smaller ones.

This is a prudent thing to do because midway, some policy-holders may feel that the need for which they had purchased the policy – say to cover a loan incase something untoward happens to them before the entire loan is paid, and the financial burden on the family is covered through the term insurance claim. But if the loan gets paid and the policy holder see’s no further need of the term plan any more- they might opt to cancel that one particular one.---, surrender their plans.

Hence, opt for multiple term insurance plans that will cover you at different stages, so you are not discouraged at any point to give up while being assured that your family is still secure through the other pla that you wan to continue.

The procedure

A crucial first step when going to buy term insurance plans: you have to reveal the details of each of the previously held insurance policies to subsequent insurance companies. If any suspicion or deceit is detected, your claims will be rejected.

After this, a risk assessment process called ‘underwriting’ is carried out. Here, your insurability is assessed based on your income level and your existing life cover. The calculated value is your Human Life Value, and term insurance plans are decided such that the derived benefits do not exceed the value.

Keep in mind, though, that the more plans you buy, the more premiums you have to pay. Hence, figure out the perfect middle ground.

As you can see, the whole process of understanding and buying multiple term insurance plans is a simple one. Your insurance provider will inform you about any other essential details. For expert guidance and cost-effective premium plans, have a look at Aviva’s comprehensive term insurance plans. No excuse to not have a robust disaster management system in place at your home now.

Oct 23/19

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