6 Advantages of Joint Term Insurance for Couples

Couples in India can choose to get a joint term insurance plan where both spouses get life cover under a single insurance policy. With evolving times, especially with the number of working couples rising, the need for joint life covers is also increasing. Moreover, a joint life insurance plan will ensure that the couple’s children will be financially safeguarded even if both parents pass away. Working couples with children need to get adequate cover for their family’s secure financial future.  

Various insurance companies offer a host of term plan benefits, and couples can opt for a suitable plan based on their specific needs.  

How Does a Joint Term Life Insurance Policy Work? 

Joint term insurance plans provide life cover for both spouses under one policy. Usually, joint term plans have two tiers of death benefit, the Primary Insured and the Secondary Insured. The life cover amount for the Secondary Insured person is usually lower than that of the Primary Insured. In case of the death of either life insured, a sum assured will be paid out to the surviving spouse and other nominees. The policy will then continue as normal (some plans may also waive off all future premiums). 

When the remaining insured person passes away, the remaining sum assured amount is paid out to the surviving nominees and the policy is terminated.  

What are the Types of Joint Life Insurance Policies? 

There are two types of life insurance plans that offer a joint cover option: 

Joint Term Plans- Term insurance plans where life cover is provided to both spouses. There is usually a primary and a secondary life insured. The life cover provided to the secondary life insured is usually half that of the primary life insured. Plan ends when both insured individuals pass away, or the term comes to an end.  

Joint Endowment Plans- Endowment plans are life insurance products that also include an element of savings. Joint endowment plans usually waive off all premiums upon the death of one of the insured individuals. The plan then continues will all its benefits (including survival/maturity benefits if any) until the death of the remaining insured person or until term end.  

Benefits of Joint Life Insurance 

Some of the reasons why couples should go for joint term insurance are listed below. 

• Dual benefit of full cover for life assured and 50% cover for spouse : A joint life insurance policy is generally more affordable than two individual policies. With term insurance plans offering joint coverage for spouses, the additional benefit will be paid out in case of death of the primary policyholder. Once the primary life assured dies, the base sum assured is paid and the surviving spouse will be covered under the policy with 50% of the sum assured. 

• Cost-effective life insurance coverage for both partners: Joint term insurance will often be less expensive than buying a separate term plan for each spouse as single premium payments would cover both the husband and the wife. Also, keeping track of a single insurance plan would be much more hassle-free and cost-effective.  

• Term plan premium waiver upon death of life assured: With joint term insurance, the couples can avail of a waiver of future premium. If the primary policyholder dies during the policy term, the surviving spouse will receive the sum assured as a death benefit and will have no obligations to pay future premiums to maintain the life cover.  

• Secure the financial future of children: On the off chance that the parents pass away during the policy term, their children as beneficiaries would receive a sum assured as a regular monthly income or a lump sum. This would help the dependents meet their financial needs and have a secure future.  

• Maintain the lifestyle of the family: If both the spouses are earning members, the family will be dependent on their income to fulfil all the financial needs. To maintain this standard of living even after the policyholder's unfortunate demise, term insurance would aid the family and ensure their financial needs are taken care of. 

• Tax benefits as per prevailing norms: Term insurance in India is eligible for tax benefits under different sections of the Income Tax Act,1961. Couples can avail of tax benefits under Section 80C and on producing a renewal premium receipt. Also the sum assured received is covered under Section 10(10D). 

Who Is Joint Term Life Insurance Policy For? 

Joint term insurance policies are ideal for couples who want to secure their dependants, especially their children, against an uncertain future. Joint life cover provides greater financial security for nominees for a reasonable premium. Additionally, having one joint insurance plan can be more convenient for a couple. Buying two different plans can increase the premiums paid by the family, and different plans may have their own terms and conditions that policyholders will have to be aware of.  

Hence, couples might prefer having a single joint life insurance plan over buying two separate policies.  

Joint Term Life Vs Two Individual Term Life Plan 

Joint Term Insurance Plans	Two Individual Term Insurance Plans
Covers two lives in one plan while maintaining a reasonable premium cost.	Only covers one life and the premium cost will noticeably increase if the family gets two individual plans.
The terms & conditions will be easier to understand, as the family will only have to track a single policy.	Can be harder to keep track of two separate plans + terms & conditions for different plans can vary drastically based on individual policy details.

What are Some Factors to Consider When Choosing a Joint Term Life Insurance Policy? 

The Life Cover Provided for Both Parties: The life cover provided by a plan should be sufficient to financially secure your dependents. In a joint plan, you also need to ensure that the secondary life insured has at least half the life cover that the primary insured has.  

The Exemptions: All life insurance plans have exemptions. It is essential to understand the exemptions of each plan to avoid situations where your claim may be rejected.  

The Other Benefits: Most term plans come with a host of optional benefits that can further enhance your plan. Check these optional benefits and add them to your policy if you feel like they can help improve your family’s financial security.  

List of Riders: Some term insurance plans have optional riders that can enhance your plan’s life cover element. These optional riders include Critical Illness Rider, Accidental Death Rider, Waiver of Premium Rider etc. Riders can be a great source of additional protection as they cover eventualities that may not be included in your plan’s general life cover.  

Conclusion 

Couples should unquestionably opt for a joint term insurance plan to prepare for unforeseen eventualities. Every couple should compare various joint term plans to understand the benefits offered by different insurers. 

Deciding on a joint term plan for you and your spouse can be difficult, as it's important to understand your specific needs before approaching an insurer. However, it's always advisable to understand your requirements and compare different options before making a final decision. Every family needs adequate life coverage to ensure the financial security of dependents like children or the elderly.  

 FAQs 

What happens to the policy after the first death? 

What happens after the first death can different based on your policy’s terms & conditions. Usually, the policy continues as normal after the first death and only a part of the life cover (covering the deceased insured) is paid out. However, some plans may also waive off all future premium payments after the first death.  

Can I customise the death benefit amount for each person? 

Yes, all term plans allow you to customise your death benefit amount. However, note that the insurance provider can deny your preferred death benefit if they feel like it does not match your net worth/Human Life Value (HLV). Additionally, in joint plans, the death benefit for the secondary life insured is usually half that of the primary life insured.  

Are riders available for Joint Term Life Insurance? 

Yes, joint term insurance plans also have optional riders that you can add to further enhance your plan.  

Chirag Iyer - BFSI Enthusiast 

Chirag is a writer and an avid reader who loves to drink coffee! His other interests include boxing, karate, and singing.