Buying Life insurance should be the primary decision of our financial planning. The main purpose behind buying life insurance policy is to protect our family financially in case of our absence. This is mostly taken by the person who earns in the family. Nowadays, both husband and wife have their individual jobs ,both have financial dependencies, that is why life insurance is vital for both of them. Due to such requirements, life insurance companies offer joint life insurance plan in which both life are covered under single contract. Let us discuss this concept in detail.
What is Joint Term Insurance : It covers married couple under one contract. Premium has to be paid for fixed period. In case of unfortunate demise of any one of them, surviving partner will receive death benefit. In case of death of both the partner, their legal heir or nominee will receive benefit. If both of them survived throughout policy term, they won’t receive any maturity benefit.
How this Plan works : Functioning of this plan vary from one insurance company to another. Let us see different variation of this plan.
i) First Claim Basis : This plan works in such a way that if anyone dies between husband and wife, remaining one will receive lump-sum amount as a death benefit and thereafter policy ceases.
ii) Both can claim : This functions by providing death benefit amount i.e sum assured to both the life insured separately.
iii) Waiver of premium : In such plans, If anyone dies between couple, surviving one receives death benefit as well as waiver of premium benefit i.e he/she does not have to pay future premiums and his/her policy will still be in-force.
iv) Lump-sum or Monthly income benefit : In some joint term insurance plan, nominee has option to select payout type i.e Lump-sum or monthly income benefit. In Lump-sum , nominee receives complete benefit directly , while in another one, nominee receives monthly benefit up to 60 months or 120 months.
v) 50 percent sum assured to secondary life assured : Most of joint term insurance plans functions by providing 50 percent sum assured to secondary policy holder. Suppose, if husband (primary policy holder) buys joint term plan where his sum assured is 1 crore, his wife (secondary policy holder) will receive sum assured of 50 lakh. in such cases, if husband dies, his wife will receive lump-sum payout in the form of death benefit i.e 1 crore while in case of his wife death, he will receive death benefit of 50 lakh.
Benefits :
i) Saves money : It helps to reduce amount of premium because both life are covered under single contract. If married couple takes individual polices, premium will be higher. So, joint life gives benefit by providing cover with comparatively cheaper cost which reduces financial burden of married couples.
ii) Easy to track : It is easy to track single policy than multiple one. Sometimes, there is a need to do policy servicing like change in frequency of paying premium, modifying beneficiary, change in sum assured, etc, which can be accomplished in single contract.
iii) Income replacement : In several Joint term insurance plan, in case of death of partner, survivor will receive sum assured as a death benefit along with monthly income till 60 months or 120 months, which differs from one plan to another.
Drawbacks :
i) In case of any unfortunate event, if both of them died, then beneficiary will receive single death benefit. In this case, if they would have taken two different plans, nominee will received benefit of both deaths.
ii) In case of divorce, policy becomes invalid and has to be terminated.
Disclaimer :
This article is not sponsored and not meant for endorsing any particular insurance company. Please Check Terms and Condition of respective organization along with inclusion and exclusion before buying insurance policy.