Joint Life Insurance Policy
Table of Contents
With a change in psychological and social factors, both men and women make equal efforts to take care of their families. If anything happens to any earning member of the family, the same kind of financial burden will arise for their dependents. When the life assured passes away, a life insurance policy serves as a financial safeguard for the assured's family.
Earlier, the term life insurance plans covered only a single individual. However, as the market continues to change, insurance companies now provide coverage for two individuals under the same policy. These types of plans are known as “Joint Life Insurance Plans.” Read on to learn the meaning, benefits, and types of joint life insurance policies.
What is Joint Life Insurance Policy?
Joint life insurance policies provide coverage for both the husband and the wife under a single plan. If any of the policyholders passes away, a joint life insurance plan will financially protect their dependents. Similar to an individual term plan, the premium for a joint life policy must be paid at regular intervals. The beneficiaries of the policyholder may submit a claim to receive the coverage amount if one of them dies within the policy tenure.
Benefits of Joint Life Insurance Policy
Some of the advantages of purchasing a Joint Term life insurance policy are listed below.
- Affordable Term Plan: One of the most advantageous features of a joint life insurance policy is that it is affordable as compared to the other plans. Thus, the policyholders can enjoy dual coverage by paying a lower premium.
- Tax Benefits: Under Section 80C of the Income Tax Act, the policyholders are eligible to receive tax deductions on the premium paid for their joint life insurance policy. Moreover, the death benefit received by the beneficiaries of the policyholder is tax-free as per Section 10 (10D) of the Income Tax Act.
- Financial Security for Loved Ones: In case of the demise of the life assured the nominees will be provided with the death benefit either in monthly installments or as a lump sum amount. Therefore, the loved ones of the life assured will be protected financially.
Types of Joint Life Insurance Policy
There are two types of joint life insurance policies, also known as couple's insurance policies. The details are discussed in the section below.
Joint Term Plan
It is similar to a standard term insurance plan in which both you and your spouse pay a premium for a certain period and get coverage throughout the policy tenure. In case of the unfortunate death of any policyholder, the beneficiaries can claim a life insurance plan. Once the policy is claimed, the plan will be terminated.
Joint Life Endowment Plan
A joint endowment plan provides the advantages of both insurance and investment. The insurance company will provide you with a guaranteed income starting with your retirement. Therefore, under this policy, the policyholder is generally paid once the policy has expired. Furthermore, the policyholder cannot claim their policy even if one of the policyholders dies.
How Does Joint Life Insurance Policy Works?
Here are some key details that you should know to understand how joint life insurance plans work.
- Most life insurance companies provide coverage up to 50% of the sum assured value to the spouse of the policyholder.
- A joint life insurance policy provides fixed monthly income to the spouse if any policyholder dies due to an unfortunate incident.
- If any policyholder dies, the policy remains active. Therefore, in this case, the sum insured is given to the surviving partner according to the terms and conditions of their joint life insurance plan.
- Some insurance companies also provide waive premium benefits to the surviving policyholder to reduce their financial burden.
- If both the policyholders pass away during the policy tenure, the death benefit is given to the beneficiary or nominee of the policy.
Who is Eligible to Buy a Joint Life Insurance Policy?
If any one policyholder dies during the policy tenure, then the other policyholder will be eligible to get the sum assured, including the waived-off premium benefit.
Let us understand this by taking an example below:
Radha and Jayant purchased a 20-year joint life insurance policy with a sum assured of Rs. 10 lakhs. Jayant met with an accident in the 15th year of the policy's tenure and died on the spot. Therefore, since Radha is a housewife and doesn’t have any other financial support, the insurance company will waive all future premiums and will provide death benefits on maturity.
Who Buy the Joint Term Insurance Policy?
A joint life insurance plan is mostly bought by married couples, business partners, or parents who want to plan the future of their children. Most couples prefer to buy joint life insurance due to its cost-effective nature.
Conclusion
A joint life policy is a type of life insurance product that provides coverage for two individuals under the same plan. When purchasing a joint life plan, make sure you evaluate all your options carefully and choose the one that best suits your needs.
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