Yes, it is legally approved to buy multiple term insurance policies. There are many advantages of taking up multiple term policies. It is a good way to diversify life coverage across different policies and reduce the amount spent on premiums. And, you will still have the protection from one policy holder if the other policy holder knocks down.
However, based on your eligibility, you can opt for more than one term plan. Also, there is no condition of having the same nominee for different term plans. Which means –
- Extra protection at relatively small additional cost by choosing multiple term plans.
- If the policy holder passes away before the defined period, the nominee will get the lump sum amount which is also known as a death claim.
- You can choose a milestone based protection term plan. Under this plan, your life insurance can be reviewed or restricted based on your dependents for event such as home renovation, children’s education and children’s marriage.
Applying for these policies have now become online and hassle free. You can compare multiple term plan options available by different policy holders and buy the best suitable for you. Even though the procedure is easy, you still have a few restrictions to get multiple term plans.
The first check is- a person can’t exceed his Human Life Value (HLV).
Human Life Value (HLV) is the present value of all future income that you could expect to earn for your family. It is defined as the total income an individual is expected to earn until retirement. Therefore, the combined coverage of all your policies put together should not exceed your HLV.
Additional Reading: What is term life insurance plan
Secondly, when you are looking out for a new plan, you will have to declare all your previous and existing term plans as well as your income to the company. Looking at the factors like your income, undeclared policies and your HLV, the policy holder can decide whether to accept or decline your application.
Thirdly, with every new term policy, the policy holder will require you to undergo some medical examination for risk assessment.
Having said all of this, it is advisable not to take insurance worth more than 20 to 30 times of your current income, depending on your age and the carrier.