Hi Chiranjeev,

The insurance companies have a formula to calculate Human Life Value (HLV) which is a multiple of your annual income. (Different for different age bands)

For eg:

18-35 : 20-25 times of your annual income

36-45: 15-20 times of your annual income

And so. The multiple reduces as the age band increases.

This is primarily done to ensure that the policies are not mis-used and the value of the human life is more when alive than dead.

So to answer your question, a person can have both the mentioned policies as well as multiple term policies as long as the total Sum Assured of all the policies combined is within the limits of the HLV calculation as per the person's age.

The total Sum Assured also includes any death benefit SA which might be a part of ULIPs, Money back policies, Endowment plans, etc... that the person might be having.

Hope this helps!

Cheers :)

Dear Chiranjeev,

Life Insurance is a Fixed Benefit product. You can have more than one Life Insurance/Term Insurance policy subject to financial underwriting (Insurers give you a multiple of your total annual earned income in Life Cover). Ensure to declare about your existing Term Insurance to the new Insurer.

PMJJBY is a stock standard product linked to your bank account. If you have an active PMJJBY policy at the time of buying a term plan, disclose it in the proposal form. You should be fine after that.

Regards

Asad Akbar

Dear Chiranjeev ji,

You can have multiple life insurance policies including term plans. While taking a new one, you should disclose all such policies running in your name. Second, 20 or 10 times of annual earnings is a thumb rule, which insurance companies don't follow strictly as they depend on profile of the person. With 5L income, you may be provided with 5 cr policy by different companies depending upon other aspects too. The only thing is to ensure that you have disclosed all the details correctly. And as a thumb rule as a customer, you should be having term insurance from several companies instead of one when going for higher sum assured (that should be 50L-1cr for each).

And while taking a term plan I shall suggest claim settlement ration is quite attractive but you should try to see (reference of near and dear ones) claim ratio of amounts you are looking for. For example, if you are going for a term insurance of 1cr and some companies are good in settling large no. of claims of 5-10L but create obstacles for higher sums, better avoid.

Third, when you move up in age bracket, 40+ that time you may think of Return of Premium option. Also just for the sake of buying do not buy a 99 year term plan. Better understand at what time you shall be in active life and till what time your family may be dependent on you. Take period of 5-10 years more, as you may have option to not pay after reaching your comfort zone. Simply means say I feel 65 is good for me, I shall take a term plan upto 75. At 65 I shall decide whether I shall like to be covered or not. So always advisable to go for regular pay.

Thanks.