Articles 1515 views January 23, 2019

Joint vs Single Term Insurance: Which Insurance Policy Should You Buy?

Joint Insurance vs Single Term Insurance

The need to buy term insurance is growing as an increasing number of people realize the need to have a financial plan in place that ensures their loved ones necessary security against contingent loans and liabilities in the future. However, not all term insurance plans are alike and, hence, caution must be sought before buying the policy that would be in sync with your need and budget.

Term Insurance

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While one may wonder if term insurance plans are different for single and married couples, it is important to understand that while the term insurance benefits remain the same, some insurance companies in India offer joint term insurance policies too. A lot many couples are confused about whether they must opt for two separate term insurance plans or a joint term insurance policy.

Understanding the Concept of Joint Term Insurance Policy

The hassle of buying and paying for two separate term insurance plans can be too much to handle for some people. This explains why some couples prefer to pay for a joint term insurance cover wherein both the members are covered under a single policy. Currently, there are multiple life insurance companies in India that sell term insurance plans, each plan differing in structure, terms, and conditions.

Buying a joint term policy means that both husband and wife are covered in a single term life policy and, hence, pay a combined premium. The premium paying term is the same as the term policy period and is determined at the time of buying the policy. In the event of the sudden demise of one of the partners during the policy period, the insurance company hands over the sum assured to the surviving spouse.

The joint term insurance plans issued by the various insurance companies in India may differ in terms of policy continuity or added benefits.

  1. Most insurance companies prefer to hand over the death benefits to the surviving partner post which the policy terminates.
  2. In some cases, the term life insurance policy may continue with or without waiver of premium charges and terminates either on the death of the surviving partner or when the policy period is over.
  3. There are other companies too that offer the sum assured amount in a lump sum on the death of one partner in addition to disbursing monthly payouts for another fixed number of years. In case the surviving partner dies during the monthly payout period, then the legal heir will be entitled to the monthly payout(s) for the tenure fixed while buying the policy.
  4. In the event of the death of both the partners together, the legal heir will be entitled only to the lump sum amount of sum assured and not the monthly payout(s).

Buying Two Separate Term Plans

Not all couples are in sync with the idea of having a single joint term policy. They find paying for two separate term insurance plans more beneficial. As both the husband and wife both buy a separate term life policy for themselves, the sum assured of each term life insurance policy depends on the earning capacity of each member and the choice of death benefits.

Joint Term Insurance vs Two Separate Term Insurance Policies

More than the mere choice of sum assured, paying for a joint term insurance plan differs from buying two different term policies by each husband and wife.

S.No.Nature of Cover Joint Term Insurance Plan Two Separate Term Insurance Plans
1. Who all are covered under the policy? Both husband and wife are covered in the single policyBoth husband and wife are covered under two different policies
2.Choice of sum assured The amount of sum assured is based on a mutual decision taken by the couple.Sum assured of both the policies are different as per the annual income of each. Also, the quantum of death benefits depends on how each of them perceives the risk factor
3. Extent of insurance If one of the partners dies, then the insurance company gives the sum assured to the surviving partner. However, the surviving partner may have to pay more for premiums if he or she considers buying an insurance policy to cover his or life later. The insurance company pays in full the sum assured on death of one partner. However, the surviving spouse continues to stay insured. Having bought a premium early in life as the surviving spouse continues to be covered in lieu of nominal premium charges.
4. Death payouts on simultaneous death of bothThe legal heir is entitled to the death benefits assured under the joint term insurance policy The insurance company hands over the sum assured to the nominee (be it the spouse or other legal heir). The legal heir will also be entitled to the amount on death of the surviving spouse during the policy period.
5. AppropriatenessThis plan is best suited for middle-aged couples with same lifestyle habits and not much age difference The most suitable financial instrument for young couples as premiums are low. Moreover, buying two policies helps as the termination of one does not affect the continuity of the other.

What Should You Buy – Joint Term Policy vs Two Separate Term Plans?

This is a question that has no absolute answer, the reason being that the choice of the plan is subject to each couple’s needs and understanding of the term insurance concept. Term insurance is an ideal instrument of financial security through the choice of its features like policy period, premium charges and choice of the nominee(s) depend on the kinds of needs they have.

Whether one is looking to pay for joint term policies or individual term plans, it is important to consider the pros and cons of each. Interested customers can log on to the various insurance companies selling policies online and find out their features before deciding on what suits them best. Alternatively, they may log on to the sites of insurance web aggregators to have a better understanding of the features of each term policy before deciding to pay for one.

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