- Joint term life insurance plan provides joint protection to couples where both are the policyholders as well as beneficiaries
- In case of the single death payout option, if one partner is no more, the surviving partner is paid the sum assured, and the policy terminates thereafter, leaving the surviving partner without any life cover
- In case of double payout option, payouts are made twice, once at the death of each the insured partners
- The choice between joint term life insurance policy or two separate term policies depends on your specific needs
Today, several families have both partners as earning members, sharing the financial responsibilities like household expenses, saving for future goals, building corpus, loan repayment, child’s education, etc. The absence of either can have an impact on the financial situation of the family.
On the other hand, even if one of the spouse is not working, he or she has a financial value, and hence needs to be covered because in his or her absence, the surviving partner will have to spend toward engaging external help for managing the household. Joint term life insurance plans intend to meet the needs of such couples.
We know that individual term plans provide coverage for a definite period of time. The policyholder pays premiums (monthly, yearly or any other) till the end of the policy term. In the event of the unfortunate demise of the insured person during the policy term, the beneficiary of the policy receives the sum assured.
However, in order to meet the needs of couples, several life insurance companies offer joint life insurance policies. In these policies, both the partners are the policyholders as well as the beneficiaries. If one of them is no more, the other partner receives the death benefits.
Features of Joint Term Life Insurance Plan
- Most joint life term life insurance policies are single death payout policies. Which means that in the event of the demise of one partner, the surviving partner receives the one-time payout of the sum assured. The policy ends there, leaving the surviving partner uninsured.
- Joint term life insurance plans with double payout option are also available. As the name suggests, unlike single death payout policies, these plans make payments at the death of both the insured partners. Such policies are ideal for ensuring that both partners are covered at all times.
- In addition to the sum assured, there are options for receiving regular (e.g. monthly) payouts too.
- Several joint term life insurance plans have the option of adding riders for critical illness, accidental death, disability, and dismemberment.
- Compared to standalone policies, a joint life term plan is easier to manage and track.
Points to Keep in Mind While Buying the Joint Term Life Insurance Plan
Since a joint life policy with single death payout option ends after the demise of one member, the surviving spouse does not have any cover. Hence, he or she might want to buy a new individual term life insurance policy. However, at that stage, the premium might be steep.
For example, in case of Exide Life Elite Term Plan bought online, for 1 crore sum assured, annual premium at the age of 30 (non-smoking male) for a 30-year term tenure is ₹ 9,809*. This premium is paid till age 60. If the non-smoking male buys a term life insurance plan at the age 50 for a 10-year term period, the annual premium stands at ₹ 22,853 which has to be paid till age 60.
Hence, having a double payout joint term policy or two separate term life insurance plans for each spouse is preferred. Secondly, in case of a divorce, if one person stops paying the premium, the other policyholder has to bear the entire premium.
It has been seen that the difference in premiums of the joint term life insurance policy and the combination of two separate term life insurance plans, is not very significant. But this depends on factors such as age of the partners when the policy was bought, age difference between them and the life cover chosen.
Comparison between the joint term plan and two separate term life insurance policies in terms of features, premiums, and life cover, can help you to take the best decision.
* 30 year, non-smoking male, with no pre-medical conditions
