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One of the most common financial rules is not to put all your eggs in one basket, also known as diversification. While that’s important advice when it comes to your stock portfolio, does the same adage work with insurance policies? It is not uncommon to have multiple insurance policies for different purposes. A term life for death coverage, a whole life plan for critical illness, a standalone early or multi-pay critical illness plan, an Integrated Shield Plan, and even a personal accident plan are just some of the common a person may have to help them transfer the risk of financial uncertainties when they are faced with health problems that could impact their lives. For those of us who have a trusted agent, it’s likely that since your insurance agent who has helped you apply for those policies is tied to one insurance company, all your policies will be from that same company. So, does it make sense to “diversify” your insurance policies and get them from different insurers? While the insurance industry is rather competitive with every insurer having a similar product to every other insurer, there are still price differences for the “same” policy across insurers. Referencing , we can see that for a 30-year-old male getting insured for $1,000,000 until the age of 65, a policy from Singlife would cost him $568 annually. If he gets it from AIA, he’ll pay $882 annually, 35.6% or $314 more. Yet, this wouldn’t be the case if he were 40 years old and buying a 25-year policy for the same insured amount, as FWD would then be the cheapest option, being 2% cheaper than Singlife and 35.4% cheaper than AIA. However, being cheaper doesn’t necessarily mean it’s a better insurance policy. A policy with a higher premium may have additional benefits, such as Total and Permanent Disability cover, which might justify the higher cost of their Term Life policies. These could be optional extras or riders with other insurers. Without looking into the details of each policy, it would be impossible to know how similar and different these policies are. While insurance policies can appear similar, no two policies are perfectly identical, especially when it comes to critical illness coverage. To help us, the  has a Critical Illness (CI) framework, with the most recent update in 2020. This framework standardises the types and definitions of 37 main Critical Illness benefits. This means that for these 37 CI benefits, you can be assured that all insurers in Singapore will follow the same definitions and make a claim payout if you were to be diagnosed with such a condition. However, coverage for CI benefits beyond these 37 late-stage illnesses may not be identical. You might have heard of policies that cover over 100 types of critical illnesses across multiple stages. When purchasing a more complex product like a multi-pay critical illness policy, it’s advantageous to compare offerings across multiple insurers to get more comprehensive coverage. However, more coverage doesn’t necessarily mean better, as specific clauses related to payouts will need to be thoroughly examined. While having multiple insurers has some pros, there are also some cons. The most important part of the policy is claims. It’s one thing to manage claims yourself, such as claiming for a personal accident plan alongside a hospital plan. But should the claim event happen because of your passing, it is the responsibility of your next of kin or your beneficiaries to be claiming the proceeds. And this is where it can get dicey. If all your insurance policies are from one insurer, one trip to the claims office should be all that’s required to claim from all the different policies you hold with that insurer. But imagine if you were to own six policies from six different insurers? Even the most organised person would likely find the amount of work required to claim each policy overwhelming. From experience, people often forget which policies they own, what benefits these policies provide, and from which insurers they bought the policies from. Now imagine your beneficiary trying to figure this out on their own. I’ve known of friends who had to ring up each insurer just to check if the deceased owned a policy with them, let alone knowing what the policy is for and if the claim is suitable. Though this is primarily an administrative issue, it remains crucial because it’s the only time you actually “use” your insurance policy. Another common challenge when buying policies from different insurers is that you’ll likely have to work with multiple insurance agents. From a sales perspective, it would often be in their favour to have you purchase all of your policies with them and the insurer they represent. Another problem is that many agents don’t end up staying in their insurance careers for their entire lives, or even if they do, they might move from one insurer to another, which can further complicate the matter. So yes, diversification is still a great way to approach most things in life and insurance is no exception. By having multiple agents (that you trust) and having multiple insurance policies from different insurer, you get more options to find the most comprehensive policy for your needs.