Last Updated on May 24, 2022 by
A term insurance policy has become a quintessential requirement for modern-day individuals who are still reeling from the after-effect of the pandemic. Gradually, the awareness about term insurance plans is increasing in India.
As per a survey called Max Life India Protection Quotient 2.0, compared to 2019, the India Protection Quotient (the degree to which Indians feel secured in an emergency) has gone up by 2 points to stand at 37. 55% of urban India feels that they are not adequately protected. This has, further, made term plans popular.
Even insurance companies are offering innovative term insurance plans to provide comprehensive coverage to policyholders. One such innovation is joint life insurance coverage. Let us read this in detail.
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Joint life term plan
A joint life term plan is one that covers two or more individuals under a single policy. Usually, insurance companies offer a joint life policy for married couples wherein both the husband and wife are covered under a single plan. There is a single sum assured and a single premium. Usually, if either of the spouses dies during the policy tenure, the sum assured is paid to the surviving partner.
Salient features of joint life term plan
- You can choose a long-term policy tenure for optimal coverage
- The death benefit can be paid in a lump sum or in annual or monthly instalments for a specified time
- Riders are available at additional premiums. You can add the riders to enhance the scope of your policy
Joint life vis-à-vis individual term insurance plans – the difference
While joint life plans cover two or more individuals under a single policy, individual term plans provide coverage only on a single life. Here are the major differences between these two types of policies:
|Points of difference||Joint life term plan||Individual term plan|
|Who is insured?||Two or more individuals like married couples or business partners. Usually, joint term plans are offered for married couples||Only one individual|
|Sum assured||Single sum assured covering both individuals. If either dies, the sum assured is paid to the surviving member||Single sum assured paid to the nominee or legal heirs when the insured dies|
|Premium||Premium is calculated considering the age and other risks of both lives. It is higher than one for individual policy but lower than two individual policies for a married couple||Premium is calculated based on the age and other risk factors of the life being insured|
|Coverage duration||Usually, till either of the insured members dies. Some plans, however, might allow coverage till the surviving member is alive subject to a maximum of the chosen tenure||Up to the chosen tenure or death of the insured, whichever is earlier|
|Coverage level||Might be restricted||Usually not restricted|
Joint or individual – which one should a married couple buy?
Both joint term life and individual plans have their respective pros and cons. A married couple should, thus, check these pros and cons and the suitability of these plans when making a choice. Have a look:
Pros and cons of joint term life insurance:
|Cheaper than buying two separate policies for each memberEase of managing a single policy provides financial security to the surviving spouse if one passes awayEnsures coverage for the spouse who is usually uninsured when the partner buys a policy for themselves||Restricted coverIf premiums are payable after the death of one member, it might become financially untenable in the case of a divorce, the plan cannot be divided among the partners. Only one partner can own the policy|
Pros and cons of individual term life insurance
|You can opt for a high sum assured and customize the policy as per your needs if you buy two individual policies for each, you would get two death benefits. The death of either partner does not affect the coverage of another partner. The other partner can, thus, enjoy coverage up to the chosen tenure even if one partner dies prematurely||Two separate policies = higher premium outgoesIt might prove challenging to service two policies|
Choosing the right policy
Though joint life plans are available, you should make a comparative analysis between the pros and cons of joint and individual term plans when deciding which one to buy. Also, factor in your coverage needs to assess how the plans suit it.
You can buy a joint term insurance plan in case:
- The spouse is a homemaker and/or does not have a source of income
- You want a clubbed policy to manage it easily
- You want to save on the premium costs
- You are in your middle ages when buying two different policies would spell a higher premium outgo
On the other hand, an individual policy is suitable if:
- Both the spouses are earning. This would give independent tax benefits to both the spouses on the premium paid
- You need independent coverage based on your financial needs
- You want to leave behind a legacy for your family
- Each partner has a different coverage requirement and wants a customized policy
Choosing the right term insurance can be daunting. The pros and cons of several policies need to be factored in. So, assess which policy fits your profile and then make an informed choice. Whatever you choose, make sure that you invest in a term insurance plan for financial security for your family in your absence. Also, opt for an adequate sum assured so that your family is adequately compensated for their financial needs.