Joint Term Insurance Or Separate Term Plans?

Life is uncertain and there is no way any of us can predict what the next will bring with it. Amidst all of this uncertainty, you will no doubt want to do everything in your power to safeguard the future and the needs of your family. One of the surest ways to do this is to buy a life insurance cover for yourself and for your family. That way, in case anything untoward happens to any of the breadwinners of the family, the surviving members will have a financial safety net to fall back on.

When it comes to life insurance, one of the most affordable ways to buy coverage is to purchase a term policy.

What is term insurance?

A term insurance plan is essentially a type of a life insurance policy that provides the insured with a pure life cover in exchange for payment of premium, which is charged by the insurance company. As the name makes it clear, the coverage provided by a term insurance plan is valid only for a specified period of time, which is known as the policy term. If the insured passes away during the policy’s term, death benefits are paid to the nominee or the legal heirs of the insured in the form of a lump-sum amount.

While a regular term insurance plan insures only one life, some policies can be purchased for two people jointly. Let us look at what these joint plans are all about.

What is joint term insurance?

A joint term insurance plan is a term policy that provides a life cover to you - the policyholder - as well as your spouse. This joint cover is provided under a single contract, and just like in the case of a regular term insurance plan, you will need to pay your premiums regularly to the insurer in order to avail the benefits of a life cover. Also, a joint term insurance plan offers similar term insurance benefits as a regular term insurance policy.

Therefore, joint plans provide death benefits, but if both the life insureds survive until the expiry of the policy, you and your spouse cease to be covered by the term insurance cover. However, on the other hand, if either you or your spouse do not survive the policy’s term, the insurer will pay out death benefits as per the terms and conditions of the joint life term plan.

Although a joint term insurance policy is generally more popular among married couples, it is not restricted to married buyers alone. Several other categories of people, like business partners, for instance, can also purchase a joint insurance plan.

That is the basic premise of a joint term insurance plan. Let us now see how it works, so you can make a more informed decision about choosing between a joint term plan and two separate term plans.

How joint term insurance works?

A joint term policy works on the principle of first death basis. This means that between the two people insured jointly under the policy, if any one passes away during the policy’s tenure, then the insurance company pays out a lump sum benefit to the surviving life assured.

If, however, the unfortunate event of simultaneous deaths of both the insured members comes to pass, then the insurance company pays the death benefits to the nominees or the legal heirs of the insured.

Joint term insurance or two separate term plans: Which one to choose?

The choice between these two options depends on many factors, like your needs, your spouse’s requirements and your ages, among other things.

A joint term insurance plan is suitable for you in conditions like -

● You and your spouse are both middle-aged, in which case the premiums for two separate plans may be a bit higher

● If you and your spouse have very similar lifestyles, like both of you being non-smokers or smokers

● If you or your spouse is a homemaker or earns a lower income than the other

However, this may not be true always. One needs to go through the detail of the product carefully and take a decision.

Two separate plans would be suitable for you and your partner if -

● You are both young, since the premiums would be lower and more affordable

● You are both working and have similar annual incomes

Conclusion

Therefore, now that you have a good idea of what joint term plans are and what the term insurance benefits associated with these plans are, you can make a more informed decision about which kind of strategy to choose for you and your spouse. The end goal of all term insurance is to protect the surviving family members, so it’s best to keep that in mind while making a choice.