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Joint life insurance provides coverage to two people in a single plan. The premium is paid by both the policyholders for a fixed period, and after the first death, i.e. if one of the two policyholder die, the surviving policyholder receives the sum assured.
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These plans are known as Joint Life Term insurance plans and are most common among married couples. Let us understand about Joint Life Policy in detail:
The Joint Life Insurance Plan provides coverage to two individuals (wife and husband) under a single plan. This type of combined term insurance plan will ensure the financial security of the family in case of the death of one of the life assured. The premium amount for Joint Life Policy should be paid in regular time intervals as an individual term plan. In case one of the life assured passes away, the life cover amount is paid to the other life assured. However, the policy expires with the death of one insured spouse.
If the surviving life assured wants to increase the term policy coverage, he/she must buy a new term plan. Also, the plan works on the basis of the first death, which simply means that in the case of unforeseen death of one partner in the policy term, the other one could file a claim for reimbursement.
Let’s understand how joint life policy works with the help of this example:
Ramesh and Sita, a married couple from Mumbai, decide to buy a Joint Life Insurance Plan with a coverage amount of ₹1 Crore and pay a monthly premium of ₹5,000, for a 30-year policy term. This joint life insurance policy covers both of their lives under a single plan. Therefore, in the case of Ramesh’s unfortunate death while the policy is active, the life cover amount of ₹1 Crore will be paid to Sita, ensuring that she is financially secured.
Term Plans
A Joint Life policy, also called as couples life insurance is of two types- a joint endowment plan and a joint term insurance plan:
A joint term insurance plan has features like a regular term insurance plan. In this, you and your partner pay a premium amount for a fixed time period to remain covered in a joint life plan. During this time, you can easily claim the sum assured amount if any one of the partners meets with an unforeseen event. Once the claim is done, the joint-life cover will cease.
Note: Know what is term insurance first and then buy term plan for your loved ones.
The joint endowment plan has double benefits of insurance and investment. It is applicable for a fixed time period – usually before the start of retirement. The insurer will pay you some amount i.e., called endowment after the expiration of the policy. This plan works just like a basic endowment policy, with the exemption that the endowment policy will pay the couple when the plan has expired.
Even in the case of the death of one policyholder, the amount is paid to the surviving policyholder. These plans also provide maturity benefits. And, the premium payment is stopped after the death of one of the policyholders.
Following are the key benefits of a joint life policy:
Low premium amounts: Joint life policies or term insurance for spouse are economical and have low premium rates. It does not create financial difficulty and secures two persons in a single plan
Additional income: Some plans offer the added benefits of regular income to the policyholder (surviving). In case of the death of one of the life assured, the surviving one will be offered a regular income for 60 months. This makes sure the family’s financial security with an added income.
Provides financial protection: Specifically, for young couples and nuclear families, it is beneficial to buy this plan to enhance the family’s financial security. In case of any unpredictability, the obligation and liabilities will be taken care of by this plan
Apart from all above-mentioned points, there are some additional benefits of buying a joint life policy:
You can receive coverage of 50% of life cover
If both partners die in an unforeseen event, the life cover is distributed to the beneficiaries of the policy
Some joint plans also provide premium bonuses in case of a primary assured’s death.
Note: It is suggested that the term plan premium be calculated using the term plan calculator online tool by Policybazaar before buying.
Here are the different features of a joint life plan:
Provides security: If your partner dies during the policy tenure, you will get the amount.
Benefit to Beneficiary: If both partners meet with an unforeseen event, the legal beneficiary would be liable to get this amount
Choose as per your preference: After the death of your partner, you can select to get the amount as a regular (monthly income) or as a lump sum, as per your requirements
Tax Savings Benefit: You will also get tax benefits on the premium amount paid. Moreover, you can claim a deduction on tax u/s 80C of the ITA, 1961.
Note: You should also check the benefits of term insurance if you are planning to purchase the term insurance plan.
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Following are the benefits of a joint life policy:
Single-Premium: You will receive coverage for 2 individuals in a single premium amount
Economical: Compared to individual plans, joint life cover plan premiums are less
Less Documentation: The joint-life policy has easy and minimal procedures for documentation
Replacement of Income: In case of the policyholder’s death, the nominee can get advantage from the monthly installments offered by the plan, which will help them in setting their budget and offers a constant income source. Being a life assured, you can select the payout type between monthly installment and lump sum, based on the family’s requirements.
Generally, couples consider a joint life policy as it is cost-effective and helpful in the long run. If one of the policyholders passes away, the surviving partner is eligible for the full life cover amount and he/she is also exempted from paying future premium amounts to keep the policy active.
Additionally, joint life plans are right for married couples and also for business partners. This helps a large number of people to use a life insurance plan to protect their company interests. Parents are also eligible to buy a joint life policy with their kids. The amount from the plan can help provide financial security to the child such as in increasing education costs, medical treatments, etc.
Life is full of un predictabilities. Therefore, you should always focus on good financial planning to protect the future of your family in your absence. A joint life policy is the best option for couples as it acts as a cost-effective financial safety net for your spouse in the long run. Compare term plans and select the best plan as per your requirements.
Note: Check out the best term insurance policy in India and choose one that suits your requirements.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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