Is Joint Life Insurance A Good Idea?

If you are married or single, each person needs to cover their loved ones with an insurance policy. While, due to its availability, term insurance is very popular, nuclear families are considering the option of joint life insurance. This form of plan is generally favoured by earning married couples as the plan aims to include coverage on a first death basis.

The plan is perfect, not only for married couples, but both business partners and parents can opt to invest. Compared to health insurance plans, it is a safer choice and it is cost-effective. The rates are less costly, plus you get wider coverage.

Benefits of Joint Life Insurance

1. The benefits of joint life policy are that it pays out independently of which partner dies and is cheaper than two separate life insurance plans. For young couples who are looking to save money on insurance, or for business partners, it might be good.
2. This insurance is useful for young couples who are starting their family life, especially those with small children or unpaid debts. It is because, relative to the sum spent in the scheme, the payout received following the death of one of the spouses would more. As such, you can cover the life of a non-working partner/spouse, and taking care of the children and other family members may be a huge responsibility if the working partner/spouse were to die.
3. If all spouses and partners die in an unforeseen circumstance, the legal heir is entitled to receive the sum assured as a death benefit. Certain policies allow you to make separate claims in the case of the death part of the policy of each covered individual.
4. Instead of a lump sum after the partner's death, you can also choose a regular income option. Partners/spouses can avail of tax-saving benefits on the premiums paid.

Things to Keep in Mind Before Buying A Joint Term Insurance Plan

1. Joint life term insurance policies offer single death benefits for the most part, and after that, the policy ends. When the death payout on the joint policy is paid out, the remaining partner may have to purchase a new term life insurance policy to get life coverage.
2. One of the drawbacks of a joint term insurance contract is that if the couple chooses to separate, things can get complicated. To continue paying premiums, one of the partners will need to take the risk or the insurance will expire.
3. The sum assured is calculated in a joint life term insurance contract by determining the primary policyholder's age, lifestyle, health status, and income. The insurer just looks at the age of the secondary policyholder and the medical condition. The sum assured would focus only on the profile of the primary policyholder, even though the secondary policyholder is employed.

Conclusion

For nuclear families where both partners/spouses work, joint life insurance is ideal, especially if they have home loans and personal loans to pay. However, one must keep in mind the plus and minus of such policy to take maximum advantage in terms of cost and sum assured. Things such as single payout and the issues with divorce/ separation must be considered.

Also read 

Life Insurance Terms Everyone Should Know About

Different Types of Life Insurance Plans in India

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.