Joint Life Policy - Meaning and Benefits

What is Joint Life Insurance Policy?

The Joint Life Insurance Plan covers 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 for such a life insurance policy should be paid at 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. The plan works based on the first death, which simply means that in the case of an unforeseen death of one partner during the policy term, the other one could file a claim for reimbursement.

How does Joint Life Insurance work?

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.

What are the Types of Joint Life Insurance 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:

1. Joint Term Plan

   A joint term insurance is a type of term insurance plan with features similar to those of a regular one. In this, you and your partner pay a premium for a fixed 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 made, the joint-life cover will cease.

2. Joint Life Endowment Plan

   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 if one policyholder dies, the amount is paid to the surviving policyholder. These plans also provide maturity benefits. The premium payment is stopped after the death of one of the policyholders.

What are the Benefits of Joint Life Insurance?

A joint life insurance policy covers two individuals under a single plan—usually a married couple or partners. This type of policy offers multiple benefits for families, especially where both partners contribute financially. Here are the key benefits:

• Affordable Protection for Couples
  Joint life insurance or term insurance for spouse is a cost-effective way to insure two people under one policy. It is typically more economical than buying two separate plans, making it ideal for dual-income families or newly married couples looking to secure their future together.

• Financial Security for the Family
  This policy ensures that in case of the death of one partner, the surviving spouse or dependents receive life cover. Some plans also offer the surviving partner a regular monthly income for a set number of years, helping maintain household stability during tough times.

• Simplified Policy Management
  With one policy covering two lives, managing renewals, premium payments, and documentation becomes easier. It reduces the hassle of keeping track of two separate insurance plans, making it a convenient option for busy households.

• Estate Planning Advantage
  Some joint life plans, especially survivorship policies, allow the surviving partner to delay asset transfers until both policyholders have passed away. This helps in strategic estate planning and offers access to the policy's cash value when needed.

• Tax Benefits for the Couple
  Premiums paid toward a joint life policy qualify for tax deductions under Section 80C of the Income Tax Act. The death benefit received is also tax-free under Section 10(10D), making it a tax-efficient choice for family protection.

Note: Before buying, it is suggested that the term plan premium be calculated using Policybazaar's online term plan calculator.

What are the Features of Joint Life Insurance?

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.

• Shared Cover and Bonus Benefits: Joint plans may offer 50-50 life cover, full payout to beneficiaries if both partners pass away, and bonus benefits if the primary life assured dies first.

Note: You should also check the benefits of term insurance if you are planning to purchase the term insurance plan.

Who is Eligible to buy Joint Life Insurance?

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 business partners. This helps a large number of people 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 by increasing education costs, medical treatments, etc.

Wrapping It Up!

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.

FAQs