Life insurance provides financial security to you and your loved ones. They protect the monetary health of your family in case of your sudden demise. Earlier, insurance plans were typically offered to individuals as a single policyholder. However, as the market grew, the necessity of having a product that insures multiple people arose, which led to comprehensive protection policies for families. These comprehensive family insurances are also known as joint term insurance plans. Most individuals prefer to buy a joint life policy when they get married, as this policy offers life coverage to two individuals within a single policy.
Meaning of joint life insurance
A joint life policy is a type of life insurance that provides life cover to both husband and wife under one single policy. It ensures that in case of the sudden demise of one spouse; the policy provides financial cover for the other partner to sustain their life. According to the terms of a joint life policy, if one spouse loses their life, the other one will get life coverage. It acts as an income replacement that your spouse can use for sustaining their lifestyle and repaying any debt you had. Similar to regular life insurance, you are required to pay premiums for joint life plans at regular intervals. Use a life insurance premium calculator to find the premiums payable. For joint life policies, usually, there are no survival benefits provided to both policyholders.
Most married couples find joint-life policies to be the perfect type of life cover for them. There is no restriction regarding whether it should be you or your partner to buy the policy. Any two people can take a joint-life policy to protect their future. Usually, married couples go for it, but a parent may also choose one to secure their and their child’s future. In case of the demise of the parent, the insurance will provide financial protection to the child.
Understanding joint life insurance
Before buying a joint life policy, it is important to understand how it works and how it differs from a regular policy. A life insurance policy is a huge decision that affects the future of you and your family.
Here are some points which make a joint life cover different from a regular cover-
- Most joint life policies provide 50-50 coverage to both individuals of the plan.
- The joint policy is still active when one policyholder is no more and the other one is alive. The sum assured is given to the surviving partner according to the terms and conditions of the policy.
- In a joint life policy, there is one out of the two who is primarily insured. If the primary insured individual loses their life, the insurer usually provides the other member with a monthly payout by the insurance company. The amount and duration depend upon the policy.
- In an unfortunate incident, if both the policyholders do not survive, the company gives the sum assured of the life policy to the nominee mentioned in the policy or their legal heir.
- If in a joint-life policy, only one person is employed, the total sum assured of the policy cannot exceed the sum assured of what the primary policyholder is eligible for.
- Some joint life insurance plans offer the waiver of premiums when one policyholder is no more. This is done to reduce the financial burden on the surviving partner.
Benefits of buying joint life insurance policy
Having one policy that provides coverage for two individuals is an excellent idea, especially for close-knit family members like a husband and wife or parent and child. Here are some benefits of choosing joint life insurance plans:
- Lower premiums than two single plans
If you compare the premiums of joint life insurance, you will find it significantly lower than if you would have bought two separate individual life insurances. This is one of the biggest perks of why people choose to have a joint life plan. Use a life insurance premium calculator to get an estimate of the premiums you have to pay for your joint life policy.
- Tax advantages on premiums and payouts
The premiums that you pay for your joint life policy are exempt from taxes under Section 80C of the Income Tax Act. Also, the life cover that one member may receive in case of the demise of the other member is exempt from taxes. The sum assured is exempt under Section 10 (10D) of the Income Tax Act.
- Provides financial coverage
When you buy a joint life policy, in case one member loses their life and another person survives, the policy takes care of the financial health of the other policyholder. It acts as a financial shield in times of uncertainty.