Term insurance is the simplest form of life insurance plan that offers comprehensive life coverage over a period of time and in case the insured person dies during the tenure of the policy, the guaranteed death benefit is payable to the nominee of the policy. In case of any eventuality, a term insurance plan provides a high lump sum assured and that too at a very low premium rate.
Due to the affordability and coverage offered by a term insurance plan, it has gained huge popularity among customers who want to ensure a financially secured future for their loved ones.
Although, as pure life insurance products, term plans do not offer any survival or maturity benefit, but it is the most economical option available in the market. Suppose, you are a 26 years old salaried individual whose CTC is Rs 5,00,000 per annum. You can purchase a term plan that promises to provide 20 times of your yearly income i.e. Rs. 1 crore, in case of your untimely demise, the premium will range up to Rs7000 in that case.
In a term insurance plan, the beneficiary of the policy receives a lump sum payment in case of the unfortunate demise of the insured person along with the value added benefits or rider benefits. If you want to secure the future of your loved ones, then it is important to understand which is more beneficial for you- buying a joint term insurance or stick to a separate one.
Before you deal with the advantages and disadvantages of joint term insurance, it is important to know what exactly joint term insurance is.
In joint term insurance, the sum assured amount is generally paid out on first claim basis. The sum assured is splurged when any of the two policyholders passes away and the tenure of the policy lapses. In the case of demise of both the insured persons, the sum assured is payable to the children. Moreover, the premium paid and the benefits received by the policies are exempted from tax deduction under section 80C and 10 (10D) of Income Tax Act.
Your premium is decided on age at which you buy the policy and remains same, throughout your life
Premiums can increase between 4-8% each year after your Birthday
Your policy application could be rejected or premiums increase by 50-100%, if you develop a lifestyle disease
A joint term insurance plan provides life coverage for the couple and has similar terms and conditions as that of an individual term plan. As under joint term insurance plan, both husband and wife are covered under the same policy, it is easy to keep track of the plan. On contrary to this, in separate term insurance plans the partners have liberty to choose the cost and conditions according to their own suitability and personal requirements.
Apart from this, if the insured owns a joint term insurance policy, then only one death payout is offered under the policy, even in the case of accidental death of both the insured persons, only one death benefit is payable to the beneficiary of the policy. But in case of separate term insurance plans, the beneficiary can receive two separate payouts (from two separate term plans).
In case of separation or divorce, the joint policy gets converted into a single term insurance policy. In case one partner refuses to pay or doesn’t pay on time, the tenure of the policy lapses until the other partner takes the load of paying the premium by himself/herself.
Some of the joint term insurance policies offer add-on benefits. For example, in the case of demise of one of the spouses, some plans offer regular income to the surviving partner for the fixed period till the policy tenure comes to an end. This regular income is paid in addition to the death benefit paid to the surviving partner. Some of the policy also offers accidental death benefit rider in case of accidental death of the insured person on top of the death benefit.
Apart from this, the premium paid and the death benefit offered by the policy are exempted from tax deduction under section 80C and 10(10D) of Income Tax act.
Although purchasing a joint term insurance policy has its own pros and cons, there are certain aspects that should be kept in mind while you are planning to buy a term insurance policy.
Before zeroing in on a policy, compare the yearly premium to be paid under both joint and separate term insurance plans. Generally, joint term insurance plans are much affordable than separate plans. So, if you want to go for a more economical option, then you must opt for a joint term insurance plan. However, for your suitability and affordability, you can compare the quotes online about the various term insurance products and choose the most beneficial plan for yourself.
As joint insurance plans are not much older in the insurance market, it is important to do proper research and compare the products before buying one. Moreover, evaluate the benefits or coverage offered by joint insurance and separate insurance plans on the basis of case-to-case variations. Before you choose a term plan, check on the optional riders as well as the terms and conditions under the plan. If you are opting for a joint term insurance plans, make sure that the policy allows you to split the joint insurance policy in future (if required in case of divorce or separation).
A joint term insurance policy is most beneficial for those who want a combined financial planning. It is quite affordable and financially shields the life of your loved ones against any sort of unwanted events in future.