What are Joint Life Term Insurance Plans?

A term insurance acts as a financial safety net for the policyholder's family and dependents in the face of an unfortunate event. Traditionally, the beneficiary or the nominee gets the death benefit after the death of the family's sole breadwinner. However, with changing gender roles, where both the spouses of the nuclear families are working, joint life term insurance plans function as a feasible option in ensuring the need for insurance for the spouses under one plan. Thus, even if something unfortunate happens to either, another person would still retain financial stability. Read on to know more about Joint Life Term Insurance Plans.

How Does A Joint Life Term Insurance Plan Work?

A joint life term insurance plan offers coverage for partners who pay a premium for a fixed tenure. The policy can be claimed within its term if either of the spouses passes away. However, after this, the cover will expire, and the surviving partner has to purchase another policy plan. Some insurance plans even allow business partners and parents with children to hold a joint term insurance plan as well.

Joint Term Insurance Vs Regular Term Insurance Policy

The difference between the joint life term insurance plans and a regular term insurance policy can be observed by reading the below-mentioned points - 

1. Number of Policyholders 

The difference in the number of policyholders acts as a fundamental differentiator between a joint life term insurance plan and a regular term insurance plan. The joint life term insurance plan provides life cover to two people in contrast to the standard term insurance plan's one life cover policy.

2. Nature of The Contract

The spouses have to get different plans with different terms and conditions under the regular term insurance policy. However, through the joint life term insurance policy, the spouses or parents and their children can get a single policy contract with the same terms and conditions. 

3. Recipient of Death Benefit 

The death benefit is given to the beneficiary or a nominee after the demise of the term insurance plan's policyholder. In contrast, the death benefit of a joint life term insurance plan is given to the surviving life assured. The payment of death benefit to a nominee or a beneficiary only happens when both the policyholders of the joint plan die.

Benefits of Joint Life Term Insurance Plans

A joint term insurance plan comes with the following set of benefits - 

1. Cost Effective

The cost of purchasing individual policies for yourself and your spouse can create a financial burden of separate premium payments on some people. Here, buying joint life insurance helps in saving premium money and provides broader coverage than a single individual policy. 

2. Income Replacement 

The monthly payments are provided to the surviving insured along with the sum assured as the death benefits. This monthly payment acts as income replacement for the deceased spouse for the surviving insurer.

3. Waiver Of Premium

The surviving insured gets a waiver on further premium payments in the event of their spouse’s demise.

4. Tax Benefits

The premiums paid towards a joint term insurance plan qualify for a tax deduction under Section 80C of the Income Tax Act. Moreover, the proceeds receivable under the plan are exempt from tax under Section 10 (10D) of the Act.

Drawbacks of Joint Life Term Insurance Plans

Despite the various benefits, the policy comes with the following drawbacks -

• Non-Personalized Plans - As the plans offer life cover to both spouses on the same terms and conditions, the scope of getting personalised plans with added covers and benefits according to individual needs is absent.
• Single Death-Related Payment To The Beneficiary - In the unfortunate event of death of both the policyholders, the nominee will get a single death related payment.
• Divorce - If the couple files for divorce or lives separately, the joint policy will be terminated. 

Endnote 

The joint life insurance policy is a good option for couples and spouses with small budgets due to the various cost and tax-saving benefits. It is advisable to thoroughly study the pros and cons of multiple plans before investing.

You may also like to read:-

• Tips To Reduce Term Insurance Policy Premium
• Purchasing A Term Life Insurance Plan Online Vs Offline

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.