Is A Joint Term Insurance Plan Worth The Purchase?
Updated On Oct 11, 2021
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Joint term insurance is a relatively new concept. It started developing after women started joining the workforce. Since women also contribute to the family’s income, it is important that both partners be insured. Joint term insurance is term insurance that covers both partners in the same policy. In the case of the sudden demise of a partner due to the causes listed in the policy document, the other is entitled to the sum assured as the death benefit. If both die at the same time, the children get the sum assured. The premium payment towards the policy is eligible for a tax deduction under Sec 80C of the Income Tax Act.
Joint term insurance provides multiple options for claim payout that includes:
- In the case of the death of either partner, the surviving partner gets the sum assured as a lump sum payment, and the policy ends after that.
- In the case of the death of a partner, the other receives the sum assured, and the policy covers the other policyholder till the end of its term or till the demise of the surviving partner.
- Upon the death of one partner, the sum assured is given to the other in the form of the death benefit as a combination of lump sum and regular payments for a fixed term.
Advantages of Joint Term Insurance
Following are the advantages of joint term insurance policy:
1. Money-saving On Premiums
Term life insurance is affordable, but the premium paid towards two policies is still higher than that paid for a joint term policy. Therefore, these are suitable for couples looking for a time- and cost-saving option.
2. Various Payout Options
A joint term plan provides various claim payout options to choose from to suit the requirements of different people.
3. Tax Benefits
The premium paid towards a joint term life plan as well as the benefits received by the plan are covered under the provisions of the Income Tax Act, 1961.
4. Availability Of Riders
Joint term policies are available with riders that enhance the coverage. The premium of a rider is charged over and above the base plan.
5. Maintenance Is Easy
Since both partners do not have to pay the premium separately, either can do it, as both have access to the policy account. It becomes easy to maintain in case one of them forgets to pay the premium.
Disadvantages of Joint Term Insurance
Below mentioned are the drawbacks of purchasing a joint term insurance:
1. Only One Death Payout
In a joint term policy, only one payout is offered in the event of the demise of one of the policyholders. Even if both partners die, the beneficiary is entitled to only one death benefit. But term insurance allows the beneficiary to receive separate benefits for both.
2. Conversion Into Single Term Insurance
In the case of a divorce, the joint policy needs to be converted into a single term policy. If one of the partners refuses to make payments, the entire burden shifts to the other partner.
3. Higher Costs
Even though joint term life insurance is an affordable option when two individuals are covered under the same policy, the cost of such insurance goes up.
Buying joint life insurance not only saves on costs but also saves time and the hassle of maintaining two separate plans. To check premium calculations, you can use term plan calculators online. Compare the premium paid yearly under joint and separate term insurance.
You may also like to read - Is Term Insurance Important For Non-working Spouses?
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.