Term insurance is the most simple and affordable life cover. When you buy it, your beneficiaries receive a sum assured in case of an untoward event. Generally, the premium on term insurance is low because it is a pure life policy and does not provide any maturity benefits.
In addition to the basic coverage, you may include riders (add-ons) to procure a more comprehensive cover. Some of these add-ons are accidental disability, waiver of premium, and critical illness benefits. These are available at an additional nominal amount.
Joint term insurance
Joint term life insurance policies have gained popularity recently, as today; more working women contribute to the household income. Just like men, even women support the family equally by providing a significant portion of their earnings. Thus, it is important to secure their lives too.
A joint term plan covers both spouses under a single policy. If an unfortunate incident occurs during the policy duration, the surviving spouse gets the sum assured as per the terms and conditions. If the married couple passes away in an accident, their children receive the financial benefits under the joint plan.
Joint plans work just like a regular term plan and pay the coverage if something adverse happens during the policy tenure. These plans come with a fixed policy duration wherein the insured couple pays the premium based on the combined coverage.
Benefits of a joint term plan
Now that you understand the joint term insurance plan meaning, here are its core advantages:
- Lower premium
If you opt for two individual plans, the premium may be higher when compared to the total cost payable in a joint plan. A joint term policy can prove useful for newlyweds who want to save money for other financial goals.
- Tax benefits
The premium paid on a joint term plan is eligible for a tax deduction under Section 80C of the Income Tax Act, 1961.
- Easier maintenance
You must pay the premium on time to ensure continuous coverage under the insurance policy. When you opt for a joint plan, you need to pay only for one policy instead of two separate policies, making it simpler to maintain.
Limitations of a joint term plan
- Offers lesser flexibility
When you individually buy term plans online, you can choose the sum assured, tenure, and other features, according to your and your spouse’s subjective needs. A joint plan may not allow selecting an optimal cover suitable to the exclusive requirements of both the spouses.
- Discontinued coverage
The surviving spouse receives the sum assured in case his or her life partner passes away during the policy duration. However, after the payment of financial benefits, the plan stops, leaving the spouse without any coverage.
- Provides only a single benefit
If both the spouses die, the nominees will receive a single monetary benefit under the joint plan. If you and your spouse opt for individual plans, your beneficiaries will receive multiple benefits under both the policies.
- Can prove problematic during separation
In case of a separation or divorce, the joint policy converts to a single term plan. If your spouse refuses to pay the premium, you will have to take the entire financial burden of making timely payments to continue the cover. You may choose a policy that allows splitting the joint plan in case the need arises.
Joint term policies are relatively new, and you need to do your research before making a decision. These plans are advantageous if the age difference between you and your spouse is less or if you both have similar habits and lifestyles. Experts recommend choosing a joint plan only if the difference in premium between it and an individual term policy is significant.