Given the growing number of working women and their important contribution to family income, joint life-term insurance policies are gaining traction in India. A life insurance policy was essentially a safety net for the rest of the family if the primary breadwinner died. Given the current family structure in which both couples work, it is critical to guarantee that both husband and wife are insured so that if one of the spouses dies, the other remains financially secure.
What is a joint life policy?
A combined life insurance policy includes both spouses as policyholders and offers financial protection for both of them. In an unpredictable future, it is critical to ensure your spouse’s financial security.
A joint life insurance plan is a single plan that covers both the woman and the husband, regardless of whether they work together or separately. In this manner, the family covers the homemaker’s human life worth.
For example, if a couple has joint life insurance and the husband is the first to die, the wife will get a support payment under the joint life policy.
Whereas a single life policy would have expired, joint life insurance will cover the other spouse until the policy expires. The insurance gives financial assistance to the surviving spouse, independent of their employment position.
As a result, even if the surviving spouse dies unexpectedly, the children will have appropriate financial assistance. They may live their lives and achieve their future ambitions with the same financial assistance as if they had both parents.
There are two main types of joint life insurance policies:
Joint First-to-Die: This policy pays out the death benefit upon the first death of either of the insured individuals. After the payout, the policy terminates.
Joint Last-to-Die: This policy pays out the death benefit upon the death of the last surviving insured individual. This type of policy is often used for estate planning purposes.
How do joint life-term insurance policies work?
In a nutshell, joint life-term life insurance covers two individuals instead of just one. Joint life-term insurance products require both spouses to pay a fixed premium for a certain period of time. Within this time frame, you may file a claim for the coverage amount if either spouse dies. However, like with term insurance plans, your coverage will expire after this. If the surviving spouse wants to invest in another insurance plan, he or she must purchase a new plan.
The person buying the joint life policy is called the ‘primary life assured’. The spouse is called the ‘secondary life assured’.
The cover amount of a joint life plan can be of two types: separate or shared.
Situation 1: If the sum assured is distinct under the insurance,.
In this situation, the coverage levels for the main and secondary life guaranteed are distinct. The secondary assured’s cover amount might be equal to, half of, or 25% of the main life assured’s cover amount.
If the main life guaranteed dies, the cover amount is transferred to the secondary life assured. If the secondary life assured dies later, the policy’s nominee receives the cover amount.
For example, Gowtham purchases a combined term plan with his wife Meena for 35 years with a coverage value of Rs. 60 lakhs. Depending on the insurance schedule, Meena’s guaranteed amount is 25% of Gowtham’s, or Rs 15 lakh. They nominate their daughter, Geetha, as their nominee.
So, Gowtham is the major life guaranteed, while Meena is the secondary life assured.
Assuming Gowtham dies in the policy’s 25th year and Meena dies in the 30th year, the claim will be paid as follows:
| Gowtham passes away | Meena passes away |
| If Gowtham passes away due to a medical condition during the 25th year of the policy, then a sum of Rs. 60 lakhs is paid to the surviving spouse, Meena. | If Meena passes away during the 30th year of the policy due to an accident, then a sum of Rs. 15 lakhs is paid to their nominee, their daughter Geetha. |
Situation 2: If the sum assured is divided according to the policy
The principal and secondary life assured divide the coverage amount, and the claim is paid on a first-death basis. This implies that if one of the life guarantees dies, the claim amount is paid to the remaining life assured, and the policy is cancelled.
For example, Harsh and Nalini purchase a combined term plan with a cover value of Rs. 30 lakhs for 15 years. Let’s assume Nalini dies of a medical issue in the eighth insurance year. Harsh will get the amount promised of Rs. 30 lakhs, and the insurance will be cancelled.
What are the benefits of joint life-term insurance plans?
Depending on the coverage you acquire, you may choose the kind of clam you can produce. Certain plans pay up the whole sum based on the first claim after the death of one spouse, after which the insurance expires. In other policies, the nominees might file separate claims upon the death of each insurance holder. You may research the accompanying conditions and choose the insurance that best suits your requirements.
You may choose a policy that will pay your surviving spouse a monthly income for a certain amount of time after your death, in addition to providing guaranteed coverage. Certain insurance also provides coverage for deadly accidents.
Joint life-term insurance plans are not only less expensive, but they also eliminate the burden of keeping two separate insurance policies. You’ll just have to pay one subscription, and you can conveniently manage your account. Furthermore, knowing that you and your spouse are fully protected will give you peace of mind.
Aside from the principal advantages outlined, if you obtain a combined life insurance policy, you are also entitled to tax breaks on the premiums paid under the Income Tax Act of 1961.
With more alternatives available in India, you may assess the benefits and drawbacks of each joint life-term insurance policy before purchasing one.
Types of Joint Life Policy
You may choose between two combined life policy alternatives. Depending on your circumstances, you may decide to purchase one of them.
1. Joint Term Insurance Plan
This is the long-term life plan that you and your spouse can follow together. If the other person dies unexpectedly, either of you may claim this sum. This insurance requires you to pay a premium over a certain length of time.
Joint-term life insurance terminates following the death of both policyholders or after the policy term, whichever occurs first.
- Joint life-term insurance provides enough financial security for the family.
- The joint life term insurance premium is one of the lowest among other life insurance alternatives.
- When both spouses are working, benefits such as accidental disability and critical illness coverage may be added.
- Joint Endowment Plan.
A combined life endowment plan requires both policyholders to pay a fixed premium for a certain length of time. However, after the insurance expires, both partners will get the specified benefit amount.
The joint endowment life insurance policy functions similarly to an endowment plan. However, this plan includes both partners.
If you purchase a joint life endowment plan, the death benefit is paid to the surviving partner when one of the partners dies. However, the insurance with life coverage for the surviving spouse will continue until:
- The spouse died during the remaining policy time.
- The policy expires.
Your spouse will get the covered funds once the plan matures.
If you choose a premium protection benefit in your joint life endowment plan, death benefit payments will not affect the maturity value.
Following the death of a policyholder, no premium payments for the surviving spouse’s life insurance are due.
- Joint Whole Life Insurance
Joint whole life insurance operates similarly to a joint endowment policy. However, the coverage is supposed to continue until the surviving spouse reaches the age of 99 (or 100).
Joint whole life insurance is an excellent option to leave a legacy for your legal heirs since the coverage will continue until your natural death.
The insurance provides a death payout in the event of either partner’s death and may also be used as a retirement asset with cash value.
Joint whole life insurance plans are more common in the United States and Europe, where they are also known as permanent joint life coverage.
Who Should Get a Joint Life Policy?
Joint life insurance plans may be a useful financial tool for couples and business partners looking for affordable and accessible coverage. Before committing to combined life insurance, it is critical to thoroughly consider individual circumstances, financial objectives, and relationship factors.
Couples with shared financial responsibilities.
Joint life insurance is ideal for couples who share financial responsibilities and rely on one another’s income to satisfy their financial obligations. This includes couples with joint mortgages, shared debts, or dependents who rely on both spouses’ incomes.
Cost-conscious couples
Joint life plans are often less expensive than getting separate policies for each participant. If economic restrictions are an issue, combined life insurance may provide appropriate coverage at a cheaper premium, making it an enticing alternative for frugal couples.
Estate Planning
Couples with considerable assets may consider using joint life insurance as part of their estate planning strategy. The death benefit of combined life insurance may help pay estate taxes, allowing the surviving spouse to retain financial stability without incurring extra expenses.
Similar health and age profiles
Joint life insurance plans are normally granted depending on the health and age of both parties. If both couples are in reasonably excellent health and have comparable age profiles, they may be eligible for lower premium rates, making combined life insurance a viable alternative.
Considerations Before Choosing a Joint Life Policy
Joint life insurance is a unique option that protects two people under one policy, making it a popular choice among couples. Before deciding on a joint life insurance policy, you need to grasp the complexities and take into account a variety of considerations to ensure that the policy you choose meets your financial objectives and requirements.
Assess financial responsibilities.
Determine the degree to which you and your spouse share financial responsibility. Individual insurance may be more suitable if you have mostly independent financial commitments.
Future Insurability
Consider the possible influence on insurability if one spouse develops a medical issue. Joint life insurance expires when the first spouse dies, and the remaining partner may have difficulties obtaining new coverage if their health condition has changed.
Long-term Financial Goals
Examine your long-term financial goals and determine if combined life insurance can help you achieve them. If each spouse has different financial objectives or estate planning requirements, individual policies may be more appropriate.
Review of Policy Terms
Examine the joint life insurance terms and conditions, including how the death benefit will be divided and any limits or restrictions that may apply.
Wrapping up
With an increase in the number of women entering the workforce, getting life insurance for both the husband and wife has become essential. Obtaining insurance coverage for both will protect the house’s financial stability and the financial future of the dependents, particularly the children. This combined life insurance coverage is not only for married couples. You can safeguard your child’s future by developing a plan with them. The joint-term plan may help a wedding couple prepare for the future by allowing them to invest while also providing tax advantages.