Joint-Life Insurance Policy

The subject of life insurance tends to be one of the most debatable and hotly contested financial planning topics for everyone. Though this is little unfortunate since life insurance is an incredibly valuable product, needed by millions to make sure that their loved ones will have the financial security in the event of their sudden death and for which there is no substitute.

Traditionally, life insurance was designed to cover the life of the primary breadwinner of the family. However, in recent years thing have changed a lot, particularly with the significant rise in the number of working couples. Nowadays, several family members have both partners as earning members, sharing all the financial responsibilities together like household expenses, child’s education, retirement savings etc. In such cases where both the partners are working, it makes more sense to opt for two separate term insurance covers. 

On the contrary, even if one of the spouses is not working, he or she still has a financial value, and hence needs to be covered because, in his or her absence, the surviving partner will have to spend toward engaging external help for managing the household. This has forced people to realize the need for life insurance cover for the spouse as well.  If you are married, it’s probably a good idea to take a joint life insurance policy which covers both of you in a single policy.

What’s the difference between single life insurance and joint life insurance

Most people tend to opt for single-level life insurance, while joint life insurance is slightly less popular. The guide below will explain the key differences between the two of them (joint and individual life insurance) by highlighting the main benefits of each.

Joint Life Cover

As the name suggests, a joint life insurance policy offers the opportunity to cover oneself along with spouse under one contract for a single premium payment each month. It is a comprehensive protection plan for you and your spouse. It is very important to understand that joint life insurance policies usually make pay out for the first death, meaning once one partner has passed away, the remaining person on the policy is no longer covered.

However, joint term plans also offer with double payout option, meaning these plans make payment at the death of both the insured partners. E.g. In PNB MetLife- Mera Term Plan- The coverage for partner is limited to 50% of primary life insured’s cover. This option is available if your sum assured is more than 50 lacs. Hence, the cover for each partner will be Rs. 25 lacs.

This plan ensures that life cover for your better half continues even if you are not there and all future premiums for your partner’s cover will be waived off. Such policies are ideal for ensuring both partners are covered at all times. In Edelweiss Tokio- Zindagi Plus plan life cover will start on the life of the spouse and will continue for the remaining policy term. Upon the death of the spouse before the maturity date, the better half will receive the death benefit in form of sum assured which is 50% of the base sum assured or Rs. 1 crore whichever is lower. No future premiums will be required to pay by the spouse.
 
Weighing the pros and cons

Affordability is probably the main benefit of a joint life insurance policy because it is relatively cheaper than buying two separate term insurance plans. For people on a budget and is looking to get a policy, buying joint term policy may be a good option. But here’s the catch- Remember how premium of your policy depends on your health status? If you or your partner is considerably unhealthy than the other, then the other person might end up paying a lot more over the life of policy than they would have if they had bought their own policy. 

The other downside to having a joint policy is ‘divorce’. You can’t simply split the policy between the two of you. However, if you have separate policies neither will be affected in the event of the split with your other half.

Single Life Cover

Even though joint life cover might sound the best option for many couples, but taking out two separate policies offers flexibility and ensure that your beneficiaries receive a pay-out for each death. A single-life insurance policy covers one person only and pays out the chosen amount of cover if that person dies during the length of the policy. Independent life insurance is underwritten by taking into account the actuarial risk of death of the one individual being insured. By opting for separate policies, it allows to insure each person for a different amount if required as some may wish to take out a higher level of insurance for their family’s financial security.

Conclusion

Both the insurance plans come with their own set of advantages. The best type of cover depends on the need of the insurer’s circumstances. A lot of people will find joint life as the best option for cover their needs as they are highly useful when providing coverage to non-working spouses. However, if that’s not the case, some will appreciate the flexibility and added protection of taking out two separate life insurance articles.