Life insurance: Know how a joint life cover works

Life insurance is all about protecting and supporting your loved ones. It gives you great peace of mind when you know that your family will be financially secure in the event of your sudden death. The money that your dependents receive can be used for household bills, daily expenses, children s education and marriage, and healthcare. The total sum insured needed greatly varies from person to person as everyone has their individual needs and requirements.

In the last couple of years, there has been a significant rise in the number of working couples. This has forced people to realise the need of life insurance cover for the spouse as well. No doubt, it seems a sensible option as both the partners have provisions in place to provide a financial safety net for their family in the event of their premature death. At the same time, many individuals es who have a non-working spouse think of investing in a joint life cover as they wish to secure the life of their partner. Buying a joint life cover for a non-working spouse assures that the person does not have to depend upon anyone for financial help. A joint life cover gives financial stability to both the lives insured.

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Joint life cover

As the name suggests, a joint life insurance policy covers two individuals often on a first death basis meaning the total sum insured is paid out if either of them dies during the length of the policy. However, most policies end immediately after the death of any one of the insured members.

The need for a joint life cover

The need for joint life cover came into existence with the introduction of double income nuclear families in the society. In such families, both the earning members, i.e., husband and wife, contribute equally towards meeting the various household expenses including lifestyle, loans, kids education, marriage and a lot more.

Considering all these aspects, the financial impact of death or disability of any of the earning members is very big and it is very important that all such unforeseen events must be adequately covered by investing in a joint life cover.

Joint life cover is best for young couples, especially those who have dependent children. The sum assured that the partner receives on death of the spouse is quite significant. One may even choose to cover the life of the non-working spouse as well as in case of death of the breadwinner, taking care of the dependent children and other family members can be a challenging task without an appropriate financial support.

Advantages

The main advantage of a joint life insurance policy is that it is relatively cheaper than buying two individual insurance plans. For people on a budget and looking to get a joint policy, this may be a good option. Joint policies often appeal to couples who don t have children as dependents and only count each other as their main dependents. In case of some joint life insurance policies, there is a payment on the death of each of the two individuals. Under all such plans, the insurer provides a regular income to the surviving spouse for a fixed time period which is usually up to 60 months.

The amount paid in monthly instalments is usually in addition to the death benefit paid to the surviving spouse. Under a joint life insurance cover, you can easily add critical illness rider to the base policy. The premiums paid are eligible for tax benefits under Sections 80C and 10(10D).

The writer is chief business officer, Life Insurance, Policybazaar.com

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