Term Insurance Plan – Why Splitting Cover is a Great Idea?

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Splitting refers to the division of a huge block into several smaller ones. Splitting a Term Insurance Plan is having two or more of them rather than just one. It’s possible to purchase two separate policies: one with a standard term that will last for 30 years or until retirement and another that will last for the rest of your life if you’re fussy about such things.

While the first will assure family safety, the second will help you leave something behind for future generations. To understand Term Insurance Plan splitting, continue reading this article that speaks about everything from benefits to demerits, and whether splitting is a good idea.

Benefits of Dividing a Term Insurance Policy

You can purchase different term insurance policies at various points in your life. Typically, newer plans are more sophisticated and provide special benefits, while older plans gain from experience. The following are the top three benefits of splitting a Term Insurance Plan:

 1. Purchase coverage that lasts longer

Splitting your term insurance coverage might help you save money and provide coverage for longer. How? Read on. Most term insurance policies offer up to 30 years of coverage. Therefore, if you bought a cover at 25, you will be without coverage during the last 5–10 years of retirement. The plan can be broken into two to prevent this.

2. To pay off your debts

Your Term Insurance Plan can be divided to serve a variety of needs. For instance, if you have a loan, you can purchase a term plan that will pay off the debt in the event of your death. Purchase a new plan to protect the family from having to cope with your bills.

3. Mental calm

By dividing the term plan, you can cover your important bases. By knowing that everything is in order, tension can be reduced.

Demerits of Dividing a Term Insurance Policy

There are five drawbacks to splitting term insurance policies. Splitting Term Insurance Plan has equally significant drawbacks. These difficulties may result in time wastage and administrative obstacles. Following is a summary of some typical problems of splitting policies:

1. Different Premiums

Owning multiple policies means you have added to your workload. The first difficulty you’ll face is remembering dates, which becomes more difficult if you’ve chosen to pay monthly. If you have four insurance policies and pay the monthly premiums, it works up to 48 payments made annually.

2. Several Medical Exams and Supporting Documentation

Signing up for numerous insurance policies can be tedious if they all require medical exams. You will need to complete the documentation process for each of these policies separately, in addition to completing the same medical exams repeatedly.

3. Discounts are lost

The maximum Sum Assured option may qualify for premium savings from insurers. This potential savings will be lost if policies are split.

When should the Term Insurance Cover be Split?

Term insurance splitting is an option to consider in the following scenarios. But before making any choice, study the rules and evaluate your financial situation. In addition to being challenging to manage, buying more than three-term policies will hurt your money.

1.    Early Plan Expiration

One of the main justifications for purchasing a new Term Insurance Plan is this. The fundamental aspect of term life insurance is that it only provides coverage for a predetermined time. Let’s say you invested in a 20-year term plan when you were 25.

When you turn 40, you realize you need a new insurance policy because you’re married and have children. At this point, you can buy a new term plan with a sizable cover so that it will be sufficient to support your family.

2. Benefits Distribution with No Arguments

Buying numerous term insurance policies can be a good option to prevent arguments among family members or others after your death. By splitting your term insurance policy, you can divide the rewards to your family after your death. This example will help you understand better.

A 35-year-old man named X purchased a Term Insurance Plan to protect his family’s financial stability. However, he chooses to divide the insurance and buy two-term policies to avoid misunderstandings. He nominated his wife in one and, in the other, his child. In the event of his passing, a different payment will be made.


Several criteria determine whether you should divide your term insurance. Among these are your work security, dependents’ circumstances, existing and prospective financial situations, and preferences. Therefore, choose wisely!

  • Post published:August 10, 2023
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  • Post category:Finance

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