What is a Joint Life Insurance Policy and its benefits?
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What is a Joint Term Insurance Plan? Key Benefits of Joint Term Plan

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  • 10th Mar 2021
  • 2,548

What is a Joint Term Insurance Plan? Key Benefits of Joint Term Plan

If you are the sole jobholder of the family, getting a term insurance plan is a brilliant way to protect your family in the event of an unfortunate incident. However, if you and your spouse are in the workforce, then your family’s financial stability depends on both individuals. Getting separate term insurance plans can help you prepare for the future, but it may not be cost-efficient. In such a scenario, a joint term plan will provide the necessary coverage.

What is joint term life insurance

As the name suggests, joint term insurance will provide insurance coverage to both husband and wife under one policy. Given the increasing number of women joining the workforce, a joint term plan will promise the financial stability of the household in case anything happens to a member of the policy. Just like an individual term plan, the premium will have to be paid regularly for joint term coverage. In the event of an unfortunate demise of one member during the policy tenure, the other can file for the claim to get the coverage amount. If the policy reaches maturity, there is no survival benefit associated with a joint term insurance plan.

While the joint term life plan may be perfectly suitable for married couples, there is no restriction on it as to who can get the policy. Any two individuals can get the joint term insurance plan to safeguard the other’s future. For instance, the joint plan can be taken by a parent and their child. If the parent passes away, the payout from the plan will take care of the financial safety and other massive expenditures, like education.

Key benefits of the joint term insurance plan are:

1. Joint term plans are comparatively cheaper than getting two separate individual plans:

One of the most notable benefits of getting a joint term insurance plan is the savings that a married couple can get through this plan. Buying two individual policies can be quite costly when compared with the costs of getting the joint term plan. The cost of paying premiums on two separate policies will be higher than paying the premiums on a single plan. This feature can help a new married couple increase their nest egg of savings as they start a new life together.

2. Replacement of lost income to the beneficiary in case of death of the insured:

The policy you choose can make quite a difference in the payout options you get through it. The plan offers you the flexibility to choose the claim you make. You will have the option to opt for the entire amount being paid out in lump sum to the beneficiary, or the amount being paid out in monthly instalments. The monthly instalments that the beneficiary gets through the policy will help them better plan their finances and act as a steady flow of income.

3. Income tax benefits on the premium paid and the death benefits of the joint term plan:

The premiums that are paid towards the policy are eligible for tax deductions, under the Section 80C of the ITA (Income Tax Act). Apart from this, the death benefit that the beneficiaries may get is also exempt from tax under Section 10 (10D) .

*The tax benefits received through a term plan will vary based on the changes in the tax laws.

Summing up

With an increase in the number of women entering the workforce, getting life insurance for both the husband and wife has become essential. Getting insurance coverage for both will safeguard the financial stability of the house and secure the financial future of the dependents, especially the children. This joint life insurance plan is not restricted to married couples. You can ensure your child’s future by getting the plan with them. The joint term plan can help a newlywed couple plan for their future by helping them save and also provide tax benefits.

- A Consumer Education Initiative series by Kotak Life

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