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, 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. A joint life policy will provide the necessary coverage in such a scenario.
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. 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. However, 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 who can get the policy. Any two individuals can get the joint term insurance plan to safeguard the other’s future. For instance, a parent and their child can take a joint plan. 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:
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 a married couple can get through this plan. Buying two individual policies can be quite costly compared to getting the joint term plan. Paying premiums on two separate policies will be higher than paying the premiums on a single plan. This feature can help a newly married couple increase their nest egg of savings as they start a new life together.
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. For example, you can opt for the entire amount to be paid out in lump sum to the beneficiary or the amount to be paid out in monthly instalments. The monthly instalments the beneficiary gets through the policy will help them better plan their finances and act as a steady flow of income.
Income tax benefits on the premium paid and the death benefits of the joint-term plan
The premiums paid for the policy are tax deductible under 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.
Types of Joint Life Policies
If you are seeking a joint life insurance policy to provide comprehensive protection, you have options, just like with any other insurance plan. It could be an endowment plan or a simple term plan.
Here are the different types of joint life insurance policies available for policy buyers:
Joint Term Plan
A joint life policy, like a conventional term plan, requires you and your spouse to pay a premium for a set length of time in order to stay protected. During this time, you can collect the life insurance amount if one of you is involved in an unfortunate incident. Once this is completed, the combined life policy’s coverage will be terminated.
Joint Endowment Plan
The combined endowment plan offers to invest as well as insurance benefits. It is only good for a certain time, generally before your retirement begins. When your coverage expires, the insurance company will pay you a lump sum of money known as an endowment. A combined endowment plan operates in the same way as a conventional endowment plan, with the exception that the endowment plan pays the insured couple after the insurance has expired.
This is true even if one of the policyholders is involved in a terrible situation. When the agreed-upon period expires, the surviving partner will receive the cover and the endowment money. Endowment plans can also receive maturity benefits.
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 house’s financial stability and secure the dependents’ financial future, 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.
