Couple Goals: Protection made easy with joint term insurance plans

• In joint term policies, distinct coverage amounts are allocated for the primary life assured and the secondary life assured.
  
• A joint coverage, characterised by premiums for both partners within a single policy, proves to be more economical.
  
• If the policy includes a premium waiver feature, the life insurance for the surviving spouse will continue without the need for extra premium payments.
  

When Delhi-based Shamik Mukherjee got married, he figured out that he needed to get term insurance. His wife, Sanchari is a homemaker, so he decided to get term insurance for himself. After all, term insurance is supposed to replace the income of the primary earning member in the unfortunate incident of his demise. Mukherjee did not intend to take a separate policy for his wife.

However, on being advised by his financial planner, he decided to go for a joint term insurance.

How a joint term insurance works

“Joint-term policies are a type of life insurance policy that provides coverage to two individuals under a single plan,” says Rhishabh Garg, head, Term Insurance, Policybazaar.com.

A couple can take a joint term policy even if one of them does not have an income. In such a policy, distinct coverage amounts are allocated for the primary life assured and the secondary life assured. The coverage for the secondary insured can be up to 50% of the sum assured of the primary life assured.

“In the event of the primary life assured's death, the nominee chosen by them will receive the death benefit. The policy will continue for the second life insured, but they do not have to pay future premiums. Later, in the event of the second life insured's death, their nominee will receive the death benefit, which will be a different nominee than earlier mentioned,” says Garg.

For example, for a joint life term cover of ₹1 crore, the spouse cover might be ₹20 lakh. In case of the death of the primary life while the spouse is alive, ₹1 crore death benefit is paid, and any remaining future premiums are typically waived off. The benefit payable on the subsequent death of the spouse is assumed at ₹20 lakh in this case. This can be altered as per the requirements and needs of the family.

Joint term policy: Pros and cons

Opting for two distinct policies can result in higher long-term costs. A joint coverage, characterised by premiums for both partners within a single policy, proves to be more economical. Furthermore, regardless of which partner passes away, the payout is guaranteed.

Further, a joint life insurance extends coverage to the surviving spouse, irrespective of their employment status. If the policy includes a premium waiver feature, the life insurance for the surviving spouse will continue without the need for extra premium payments.

On the flip side, if the surviving partner seeks new life insurance later in life, it is likely to be more costly due to their older age. Additionally, any health or medical issues that have arisen since the initial coverage was established will further contribute to increased premiums.

Should you opt for joint life insurance?

“In case the spouse doesn’t have an earned income, opting for a joint life option might be a better idea due to the comparative underwriting advantage. However, the decision should be made after assessing the individual needs of a family,” says Sabyasachi Sarkar, appointed actuary, Go Digit-Life Insurance.

When both spouses earn, opting for a single life option might work better as it would address the need of insurance in a better manner.