This is one common question that I have gotten from my clients and if you are one of them who have been asking around for an answer, the answer is a simple yes. But if you are referring to those health insurance, e.g. Shield Plans, you can only have one.
What You Need To Know About Owning Two Or More Same Policy Type
Basically you are not restricted to applying or owning two or more of the same policy type under one or two insurers. But for most insurers, you are only limited to the amount of coverage you are entitled to – and it can be based on your annual income (also quite subjective).
So how does it go? For example, some insurers may limit the amount of death coverage you may get under them up to a maximum limit of 10 – 20 times (or any multiples which you need to check out with your Financial Planner) of your annual income and also based on your current age group. For Total and Permanent Disability coverage, the common limit is around $1 million and likewise for critical illnesses coverage (recommended to verify as well).
That’s why you are not restricted to owning more of the same policy type but only limited to the amount of coverage you have with them. This is also one reason why in your insurance application form, it’s common to see a particular section that will ask you on the total number of insurance policies you have and the total amount of coverage. You may also be asked to provide a copy of your income tax as a proof to your current annual income status – the moment you apply for a certain amount of sum assured.
The Benefits Of Getting More Of The Same Policy Type Under One Or More Insurers
If your Financial Planner has done a financial planning review with you and recommended that you ought to get more insurance coverage but your rejection to him is that you are worried of the above – this particular section will share some light and maybe help to change your mind a little.
This is because there are certain benefits to getting more than one of the same policy type and even under more than one insurer. Benefits like:
1. You Get To Choose How You Want To Claim Or Surrender
I shall touch on the topic of surrendering if you own two Whole Life Insurance Policies. As you are aware that Whole Life Insurance has the savings component and if you start it young and keep it going till your retirement age, you will have generated quite a consistent and good return out from it.
Therefore if you own two of the same policies type and you have reached your retirement age, you get to have a choice of either to keep both as a form of legacy to your next generation or to keep one going for your next generation and to surrender one as a form of supplementing your retirement lifestyle.
That’s why its good to have more than one of the same policy type. Just imagine if you only have that single policy, and you decide to surrender it but you want to leave some legacy, you may not be able to achieve it. Surrendering part of that only policy, you may not get have the best of both world because you will be getting a smaller amount and at the same time, leaving a much little amount behind.
2. You Get To Have Different Claim Process From Different Insurers
In terms of claim process, you may get different views from different insurers. That’s why by having more than one policy type can be to your benefits because should there be a claim, and one insurer decides to reject the claim for some reasons, you still can try out the other insurer who may just approve it. In this manner, instead of getting into a dilemma, you get some solutions out from a tight situation.
3. You Get To Enjoy Some Form Of Rate Of Growth
Some insurers are from different countries and therefore most of their assets and investment strategies are implemented in their own country. And different financial markets may not generate the same rate of return as compared to the others – one market may not experience growth but the other market may.
That’s why, maybe in terms of getting different Endowment Savings plan from more than one insurers, you may get to gain some benefits out from doing so. Rather than having to go through a few years of poor investment returns and complaining that other insurance company is doing better, why not, be someone who may be affected by this but still can look forward to something good from the insurance company that’s doing well.
In conclusion, you can definitely own more of the same policy type under one or more insurers but only limited to the amount of insurance coverage and there are also benefits out from owning them as well. What is being listed above is just a few of those many benefits which is best discussed with your Financial Planner.
If you have been one of those who have the above issues, I hope that this post can give you a clearer picture!