Why should you consider buying Joint Term Plan if you are married?

Most people consider insurance to be one of the most critical investments of their life. After all, it should be a well-thought-out decision as it ensures their dependents are well cared for, even if they are no longer present. Term plan is among the most popular types of insurance policies one can opt for because they provide a higher sum assured at a very reasonable premium.

Have you ever thought of adding your spouse to your term insurance? Joint-term plans are policies in which both spouses are policyholders. The benefits of choosing a joint term insurance plan over two individual term plans are discussed below:

How does a term insurance plan for a husband and wife work in India?

Under a joint life insurance policy, both of them are required to pay a single premium over a set period of time. In this type of joint life insurance, if one of the partners dies, the surviving partner can claim the life cover sum assured. 

The primary reason to pursue joint-term life insurance is to take advantage of the premium waiver benefit, which ends up being cost-effective in the long run. In the event of the policyholder’s death, the surviving spouse is not only entitled to the full assured sum on the primary policyholder’s cover, but he or she is also exempt from paying future premiums to keep his or her cover for this sort of joint life insurance in place.

For example, a couple with a husband aged 36 and a wife aged 35 can choose from a variety of joint life insurance plans worth INR 50 lakhs and INR 25 lakhs, respectively. In the event of the husband’s death, the wife will receive the sum insured of INR 50 lakh. In addition, her INR 25 lakh term plan will continue without her having to pay any premiums.

The following are some pointers to help you understand how a joint term insurance cover works:

  • It works largely on the first death basis, which means that if either of the two insured people dies during the policy term, the insured who survives will receive the death benefit as per the payout condition written on the policy document. 
  • If both insureds die in an unfortunate scenario, the beneficiary or heirs will legally get the sum assured as a death benefit.
  • The joint-term life insurance plans available in the market provide the spouse with coverage of up to 50% of the sum assured in the event of the primary insured’s death.

Benefits of Choosing Joint Term Plan

1. Increased Sum Assured: A joint term plan for spouses provides a higher sum assured to nominees, including children. Ensure that you have chosen a term plan that pays out for both spouses, not just one. This way, even if one spouse dies and their sum assured is paid, the beneficiaries will still receive the sum assured if the other spouse dies.

2. Convenience: Many people detest buying insurance policies due to the extra paperwork one has to do. With a joint term plan, this issue is taken out of the equation. With a joint term plan, there is one document you have to fill out, sign and submit. Along with a variety of benefits, such as flexibility in paying premiums and payment of the sum assured upon the policyholder’s death, the term plan allows policyholders to purchase the insurance with minimal documentation and maximum convenience. For example, if you choose a joint term plan, the terms and conditions stay the same for both policyholders, which means you only need to read the policy’s fine print once rather than having to read two different term plans with different terms, conditions, and fine print in the policy document.

3. Lower Premiums: Term plans are among the reasonably priced life insurance policies. However, the premiums for a single-term plan, which covers only one spouse, are much more than those for a joint-term plan. To know how much you will be able to save, you can use the term plan calculator available on most of the websites. As a couple, it is always more cost-effective to pay for a single joint term plan that covers both individuals rather than two separate term plans.

4. Premium Waiver: Joint-term plans offer a premium waiver to the surviving spouse in the event of one partner’s death, making it a useful option for couples. This implies that if the partner passes away unfortunately, they no longer have to pay premiums to keep their term plan active. Despite not paying premiums, the spouse will be eligible to claim the policy’s benefits, and their dependents will get the sum assured upon their death.

5. Tax Benefits: Section 80C of the Income Tax Act allows for tax deductions on joint-term insurance premiums. Furthermore, under Section 10(10D), the death benefit is tax deductible. It should be emphasized that these are susceptible to change under current tax regulations, which are updated on a regular basis. With such sections, one can simply reduce their tax liabilities while also benefiting from comprehensive life insurance coverage.

6. Income Replacement: A specific joint-term insurance plan provides a defined sum in the form of regular monthly payments, including the sum assured, which serves as the death benefit. These recurring payments are intended to replace the usual income that the covered partner would have received had the spouse not died.

Does it make sense to buy a joint-term plan with your spouse?

There are many benefits of buying a term plan with your spouse, both in terms of low premiums that can be compared using the term plan calculator and the added benefits. Both of you will get premium payment options and multiple options to receive the sum assured. This means that the policyholders’ nominees can receive the sum assured in one of three ways: as a lump sum, as a monthly income, or as a combination of the two. They can also choose whether to get the sum assured in monthly installments or as an increasing income.

So, we are saying,

While choosing a joint term plan is far more practical than purchasing two individual term policies for each spouse, it is always tough to determine which one is best for you. It is always preferable to assess your needs first and then approach the insurance company. One is also suggested to use a term plan calculator to understand and compare the premiums of different insurance companies. 

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