Having more than one cover in place means more financial protection, right? While it is not illegal to have more than one policy in place to create a financial safety net, it is much more complicated.
Here is what you need to know when it comes to having more than one life cover in place.
The process of taking out multiple policies
You can take out multiple life insurance policies in South Africa. It is common for people to do so. Understanding the implications of taking out more than one cover is crucial to avoid frustrations and confusion when it comes to the claims stage.
It can stretch your budget
Taking out more than one policy may seem beneficial at the time, but it is pivotal to know that they become costly, as each policy may increase every year by different amounts. The increase can range from 5% or more per annum which can cause increased financial strain in tough economic circumstances. The last thing anyone wants is having to cancel a policy they have been paying for throughout the years and not receive their money's worth.
It can create a complicated claims process
Keeping track of all your policies is one thing. Being able to place a claim on multiple policies is another. The first step is to make sure that all your documents are constantly kept up to date and placed together to make the process smoother for your loved ones to claim. The payout time will differ from insurer to insurer, making the process longer due to the extensive process and requirements that are needed to verify a claim.
You will have to inform a trusted person
There are billions of unclaimed policies that remain with insurers due to policyholders not informing their loved ones about them. Furthermore, not making them aware of a policy can lead to them not knowing about the exclusions that can impact the claim. Always ensure that you inform a trusted family member or loved one about your policy to make sure that it is claimed. You can also have a will in place to ensure that the benefits end up in the right hands.
Complicated policy management
While insurers do their best to make applying for your policy as hassle-free as possible, you still have to go through the process of taking the policy out and then keeping track of the paperwork; claims procedures, changes in premiums, exclusions, and so on. Managing one policy with help from your insurer is far easier than trying to juggle six or seven.
You are not limited to the amount of policies you may have in your name but taking careful consideration of these points can help you analyse if it is worth having more than one cover in place. Life insurance is not a sprint, but a marathon that will benefit you and your loved ones even long after you have died.