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Joint vs Individual Term Insurance: Which One Should You Choose?

Joint term insurance and individual term insurance are two different types of policies that provide coverage for a set period of time. The main difference between the two is that joint term insurance covers two people, while individual term insurance only

  • 3,396 Views | Updated on: Dec 28, 2023

When it comes to protecting your loved ones, term insurance is a popular and affordable option. But did you know that there are two types of term insurance, joint and individual?

Both types of insurance offer coverage for a specific term, but there are some key differences between the two that you should be aware of before making a decision.

Joint vs Individual Term Insurance

Joint Term Insurance Plan

A joint term insurance plan is a type of insurance that covers two people, usually a married couple or domestic partners. The policy is purchased by two individuals or partners, and the death benefit is paid out to the surviving partner when one of the partners dies.

  • The key advantage of a joint-term insurance plan is that it typically costs less than purchasing two individual policies.
  • One important thing to note about joint-term insurance plans is that they typically only pay out once when the first partner dies.
  • Additionally, if one partner outlives the other, the surviving partner will no longer have coverage.

Individual Term Insurance

  • Individual term insurance, on the other hand, is a policy that you buy only for yourself and will cover your death. The policy nominee that you choose will receive the death benefit after your demise.
  • The key advantage of individual term insurance is that it offers more flexibility than joint term insurance. For example, if one partner dies and the other wants to continue with coverage, they can do so by purchasing a new individual policy.
  • Additionally, if one partner wants to increase their coverage, they can do so without affecting the other partner’s term policy.

Difference between Joint and Individual Term Insurance

Term insurance is a cost-effective approach to provide your family with a sizable corpus regardless of what the future holds. The family can continue to exist, and the kids can pursue their education as you had envisioned and planned. But which one should the policyholder opt for: Joint or Individual? Here is how one differs from the another.

for: Joint or Individual? Here is how one differs from the another.

Category

Joint Life Insurance

Individual Term Insurance

Coverage

One insurance policy provides coverage for both partners.

Each partner adopts a different approach.

Loss of one Guaranteed Partner

The sum assured goes to the surviving partner according to the selected plan. Depending on the type of plan selected, the policy may continue.

The nominees listed in the insurance will receive the full total insured amount, after which the policy expires.

Separation

The insurer must be contacted in the event of a divorce to determine whether the insurance can be divided or kept.

There is no difference if both partners have chosen separate term plans.

If the spouse has been designated as the nominee under the policy, the only adjustment that may be necessary for this situation is for the nominee’s details.

Death of both partners

The joint life term plan’s lawful heir will be given the sum insured amount if both partners have passed away.

If both partners have individual policies, the legal successor designated in each policy will receive the sum assured payout if both partners have individual policies.

Sum Assured

The annual income of the policyholders is used to determine the total sum guaranteed. The same conditions typically apply to both parties.

The amount insured is determined using the policyholder’s yearly income.

Which type of term insurance should you purchase: Joint or individual?

The type of term insurance that is best for you depends on your circumstances. If you are married, a joint term insurance policy can be a cost-effective option as it covers both you and your spouse, with a single premium and a shared death benefit. On the other hand, individual term insurance policies can be a good option for single individuals or if you want to have separate policies for each spouse.

Both joint-term insurance plans and individual-term policies have their own set of advantages and disadvantages. Here’s how to choose:

  • A joint-term insurance plan is a cost-effective way to provide coverage for both spouses and may be a good option if both spouses have similar needs and coverage requirements. An individual term policy, on the other hand, offers more flexibility, allows you to tailor the coverage to your specific needs and can also offer additional riders to enhance your coverage
  • The best way of ensuring adequate coverage is investing in one individual policy each and then opting for another joint policy with your spouse.
  • This will ensure that both of you have sufficient cover in case of the untimely death of the other partner while optimizing premium costs.

Conclusion

Additionally, individual policies offer more tax benefits than joint policies. Ultimately, the decision of whether to choose a joint term insurance plan or an individual term policy will depend on your specific needs and circumstances. It’s recommended to consult a financial advisor before making a decision, who can help you evaluate your options and choose the best policy for your needs.

    Key takeaways

  • The main difference between joint and individual term insurance is the coverage. Joint term insurance covers two people, whereas individual term insurance covers only one person.
  • Joint-term insurance is typically less expensive than purchasing two individual policies. However, if one partner outlives the other, the surviving partner will no longer have coverage.
  • Individual term insurance offers more flexibility than joint term insurance. If one partner dies and the other wants to continue with coverage, they can do so by purchasing a new individual policy.
  • Additionally, if one partner wants to increase their coverage, they can do so without affecting the other partner’s policy in joint policy.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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