Joint term insurance vs individual term insurance: Which one is better option?
In a joint term insurance plan, not many insurers provide add-on covers along with a primary joint life insurance plan
Similar to the health insurance, term insurance also offers the provision of insuring, both, husband and wife, under one term insurance plan i.e. Joint Term Insurance. In this nature of policy, both partners are covered under the same policy and pay a combined premium. In Joint Term Insurance, the policy tenure is fixed at the beginning of the policy, and the premium is paid throughout the fixed tenure along with the fixed benefits.
Key features of a joint term insurance
Many joint life insurance plans available in the market offer coverage of up to 50% of the sum assured amount for the policyholder’s spouse.
The policy is active even after the death of either of the spouses. In that case, the sum assured is given to the surviving partner as per the policy norms.
If both happen to die in an unfortunate event, the sum assured is given to the beneficiaries of the policy or the legal heir.
In case the spouse is unemployed, the combined sum assured amount for joint life insurance cannot exceed the maximum sum assured amount applicable to the primary insured.
A few joint life insurance plans offer a waiver of premium benefits in case of the death of the primary insured.
Some joint life insurance plans offer fixed monthly payments to the spouse in case of the death of the primary insured.
Indeed term insurance is equally important for both life partners to have a smooth running life in case of the demise of either one of them or both. Hence, joint insurance makes sense to opt for a married couple however, before concluding, it is equally important to compare the key features and benefits of both, joint term insurance and individual term insurance plans as they tend to have their unique pros and cons which may affect in the long run.
Let’s compare individual & joint term insurance on different parameters.
Coverage: An individual term insurance plan provides coverage for an individual partner which means two separate policies will be required for both partners. In a joint term insurance scheme, one policy covers both partners under one plan.
Sum Insured: In an individual term insurance plan, the sum insured amount is unique to both partners depending upon their age, health conditions and salary. But in a joint term insurance plan, the sum insured depends on the annual income of the policyholder and both partners are covered under one sum insured amount and the same terms & conditions.
Death Coverage: In an individual term insurance plan, if one partner dies then the sum insured coverage is given to another partner in the form of a lump-sum amount. And the term insurance policy of the alive partner continues without any charges. In the case of joint term insurance, if unfortunately, one partner dies, then the surviving partner gets the sum lump sum insured amount but there is also a possibility that the policy gets dissolved for the surviving partner.
In case, both partners die at the same time, then the joint insurance policy’s sum insured amount goes to the nominee or the legal hire.
Conclusion
The joint term insurance is suitable for a couple where one of the partners is a homemaker as the term insurance allows only earning members to buy the policy. But if both partners are working then buying separate policies is a better option.
The joint term insurance issues the policy with the same terms and conditions which means the underwriting will be the same for both policy participants. Wherein if both partners are looking for unique features and outcomes as per their personal choices from term insurance plan then ideal would be to choose separate plans for both partners.
In a scenario of separation or divorce of the couple, the joint term policy gets affected as no provisions are stated on how the premiums and benefits will be split between the two parties. But if partners having separate term insurance plans, then there is no dent in their respective term insurance policies.
Last but not the least, in a joint term insurance plan, not many insurers provide add-on covers along with a primary joint life insurance plan. Contrary to this, individuals can choose riders as per their requirements and plans.
(The author is founder & CEO, PolicyX.com. Views expressed are personal.)