Reema came across an ad on the web which promoted joint term life insurance. She immediately called her husband Sumit and asked him “Hi. Are you busy?”
Sumit replied, “No Reema. What happened?”
Reema continued the conversation, “I just came across a term insurance plan. It’s a joint term insurance plan. Should we go ahead with it? I’m not very sure if it’s a good option for a married couple like us? I even calculated the premium amount and it’s fairly less. Since, you are my personal financial expert; I thought I’ll discuss this with you.”
Sumit then paused and replied, “Reema, let me guide you;
Buying a single policy is definitely cheaper than buying two separate policies.
As opposed to a regular life insurance policy where a nominee or beneficiary is mentioned – in Joint Life Insurance, both partners qualify as owners as well as beneficiaries. If something untoward happens to one individual, the other receives the life cover.
Now coming back to your question – are these policies suitable for all couples?
A Joint Life Insurance plan is where two lives are covered instead of one.
Joint Term Plan: In this type of joint life insurance, both individuals pay a single premium for a fixed period. In this type of joint life insurance, if one of the partners passes away, the surviving partner can claim for the life cover amount, after which, the cover expires. Some policies of this type of joint life insurance have a limit on the claimable cover amount.
The main reason to consider joint term life insurance is to avail of the premium waiver benefit, as it turns out to be cost-effective in the long run. In the case of an unfortunate demise of the policyholder, the surviving spouse is not only entitled to receive the full assured sum on the primary policyholder’s cover, but he/she also does not have to pay future premiums to keep his/her cover for this type of joint life insurance in force.
To illustrate, a couple – husband aged 36 and wife aged 35, choose from the many types of joint life insurance policies for INR 50 lakhs and INR 25 lakhs respectively. In case of the husband’s death, the wife will get the sum assured of INR 50 lakhs. Additionally, her own life insurance of INR 25 lakhs will continue without her having to pay the premiums.
MetLife’s Mera Term Plan gives the secondary policyholder up to 50% per cent of the primary policyholder’s sum assured. If a husband/wife is buying the policy (primary policyholder), their working wife/husband gets up to 50% of the primary policyholder’s sum assured, whereas a homemaker only gets 25%. PNB MetLife’s product offers a cover of up to INR 25 lakhs for homemakers. This can be taken by earning spouses looking to cover their non-working better halves.
Bajaj iSecure has no restrictions on the sum assured. With AegonReligare’siSpouse, this facility comes as a rider. Smart Hamsafar from SBI Life and PNB MetLife’s Mera Term Plan have the premium waiver clause built-in.
In some policies of this type of joint life insurance, in case of one partner’s death, the beneficiary may opt to receive either a lump sum or monthly payments for up to 10 years. In case of the main policyholder’s death, the policy continues for his/her partner and all future premiums are waived off. If the spouse, not the main policyholder, passes away, the latter’s policy continues the way it is with the same premiums. Some products despite being online policies, require policyholders to get regular health check-ups done, depending on the sum insured.
Nominee: When a couple takes a joint life insurance plan and declares their child as the nominee, the ‘regular income’ feature comes to the child’s aid in the event that his parents pass away. The child receives a lump sum or a regular monthly income, which can help fund his/her education or other financial needs.
It makes sense for a couple to assess their life situation before zeroing in on a joint life insurance plan.
For instance, joint plans are useful for couples who may want to purchase a life cover bearing in mind their housing loan liability – since they have taken a joint home loan, it is easier to manage one policy and track single premiums, and the heirs stay protected from liability as well.