What Is a Joint Term Insurance Plan and Its Benefits

A Term Insurance Plan:

Term insurance is basic life insurance everyone must have as it offers financial protection to your loved ones at an affordable premium. It is a type of life insurance that provides coverage for a certain period called 'term.' In case of an unfortunate demise of the policyholder, term insurance provides financial protection to the policyholder's family. A policyholder is required to pay a premium for a chosen term, and failing to do so will result in a policy lapse. The sum assured is offered to the nominee in the form of a death benefit in case of the unfortunate demise of the policyholder within the policy term. The policyholder is not a beneficiary in this type of insurance because the sum assured is given to the nominee in case of the death of the policyholder.

A Joint Term Insurance Plan:

A Joint Term Insurance Plan is a type of term plan that extends its coverage to the spouse of a primary policyholder. The plan ensures the financial stability of the household in case of the unfortunate demise of either or both of the joint policyholders. The policyholders are required to pay a single premium that offers coverage to both the policyholders. Just like a regular Term Plan, you will have to pay a premium for a chosen term, failing to do so will result in a policy lapse. In case of the demise of one policyholder, sum assured is offered to the spouse and in case of the demise of both the policyholders, sum assured is offered to their children or nominee. Similar to a regular Term Plan, a Joint Term Insurance Plan does not offer any survival benefit.

Although the Joint Term Insurance Plan is ideal for married couples and is mostly bought by married couples, it can be purchased by any two individuals in any relationship. For example, a student can buy a Joint Term Insurance Plan with their parent to secure their education in case of the demise of the parent and to secure the parent's future in case of the demise of the student.

Here are some of the common claim options available for the Joint Term Insurance Plans:

• In case of the demise of either partner, the surviving partner receives the sum assured in a lump sum, and the policy ends there.

• In case of the demise of either partner, the surviving partner receives a part of the sum assured as a lump sum, and the other part is offered as regular income for a certain term.

• In case of the demise of either partner, the surviving partner receives the sum assured in a lump sum and continues to cover the surviving partner under the same plan.

• In case of the demise of both the partners, the sum assured is offered to their children or nominee in a lump sum or lump sum + regular income option.

Here are the key benefits of buying a Joint Term Insurance Plan:

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1. Convenience:

Purchasing a term plan can be time-consuming as it involves a lot of research, comparison of different plans, application, verification, etc., stages. This can be avoided by purchasing a single policy instead of two. Besides, keeping track of multiple policies and remembering their due dates can also be challenging. If you fail to make the premium payment or forget the due date, your insurer can charge you a late payment fee, or your policy can lapse. With a single policy, you will pay a single premium for two policyholders and reduce the chances of missing the premium payment date.

2. More Affordable:

Buying two separate life insurance policies can be very expensive as the premium needs to be paid for the entire insurance term without any delay or default. The main reason why the Joint Term Insurance Plans are preferred by couples is that they are comparatively cheaper than buying two separate term plans. The difference in the amount of premium can make a substantial difference over an insurance term, and this amount can help married couples save for their future goals or retirement funds.

3. Multiple Claim Options to Choose from:

As discussed above, the Joint Term Insurance Plans offer multiple claim options you can choose from, considering your requirements at the time of purchasing the policy. So, if you are only two people in the family, it is advisable to buy a plan that offers coverage to either partner and ends when the sum assured is received by the surviving partner. This will help you save more on the premium as the premium can be higher for the plans that offer coverage to the surviving partner. However, if you have children or any other dependents, you should buy a policy that offers coverage to the surviving partner as well so that your dependent's future is secured.

4. Tax Benefits:

The premiums paid towards the Joint Term Plan are deductible under Section 80C of the Income Tax Act, 1961. Moreover, the death benefit is also covered under section 10 (10D) of the Income Tax Act.

5. Availability of Riders and Add-ons:

Just like regular term plans, the Joint Term Insurance Plans also offer several riders and add-ons, which may differ from insurer to insurer. You can purchase suitable riders and add-ons like accidental death, critical illness, etc., to maximize your term plan's benefits for a slightly increased premium.

Here are some downsides of buying a Joint Term Insurance Plan:

1. Since lifestyle habits play a significant role in the premium calculation, buying a Joint Term Insurance Plan makes sense when both partners have similar lifestyles. For example, the policy premium will be considerably higher compared to buying two separate policies if one partner is a smoker. In such a case, buying separate policies for both partners can be more affordable.

2. In case of a financial dispute between the partners or divorce, the insurers allow you to convert the joint policy into separate policies. However, if one partner does not show up or denies paying the premium, the premium burden falls on the other partner.

3. Not all the Joint Term Insurance Policies are affordable. It would help if you do proper research before purchasing a policy, as you may get two regular policies for a lower premium compared to the premium of some joint plans.

To Conclude:

The Joint Term Insurance Plans are best suited for you if you are looking for a term plan for you and your spouse at an affordable premium. It is advisable to consider the pros and cons of regular and joint plans and choose the one that matches your requirements. Before buying a Joint Term Insurance Plan, you should do thorough research and find the insurer that offers the best value. Apart from the premium, it would help if you also consider other aspects like the insurer's reputation, customer reviews, customer service, claim settlement ratio, etc. while choosing the insurer.

Warm Regards,
Ketki Jadhav
Content Writer