How to choose between joint vs separate term insurance plans?

September 3, 2020 10:57 AM

A low-cost, high-cover insurance plan meant to provide life insurance coverage - that's a term insurance. Here's why having a term insurance is essential for the future!

Life insurance , Bajaj Allianz Life, financial protection, insurance plan, term insurance plan, insurance Image Credits: Bajaj Allianz Life

Life insurance has traditionally been designed to provide financial protection on the life of the breadwinner of the family. In today’s world, with the rise in the number of working couples, the significance of life insurance for both spouses has increased considerably.

Accordingly, the best step forward, for both spouses, is to buy a term insurance plan. What is term insurance It is a low-cost, high-cover insurance plan that is primarily meant to provide life insurance coverage in the purest form.

But, hold on! Should the husband and wife buy the term insurance plans separately or buy a joint life term insurance plan? Let us find out.

How term insurance helps

In a term insurance plan, on the death of the insured within the policy term, the nominee gets the death benefit or the sum assured. Moreover, when both working spouses share the household income and expenses, the need to have insurance on both of their lives is equally important.

How joint life term insurance helps

Therefore, an alternate and an effective solution when one spouse wants to get life cover for the other spouse as well is to buy a joint life term insurance plan. As the name suggests, in a joint life term insurance policy, the life cover is on the lives of both husband and wife, in a single term policy.

As lives of both spouses are covered i.e. each has a sum assured of their own, on the death of any of the insured within the policy term, the other spouse gets the death benefit or the sum assured. In case both of them die, the sum assured is paid to the legal heirs of the insured. Bajaj Allianz Life – Smart Protect Goal is one such joint life term insurance plan that has several protection options to choose from including an option to cover spouse’s life.

How joint life term insurance plan works

The principle of first death is usually followed in the case of a joint term life insurance plan. According to the principle, if any one of the two insured people dies during the policy’s tenure, the surviving policyholder receives a lump sum pay-out in the form of a death benefit. Joint Life term plans also offer separate sum assured for both the individuals. However, there could be different variants of joint life term insurance plans. In some plans offered by insurance companies, the surviving spouse gets coverage of up to 50 per cent of the sum assured of the primary insured. The common thing about these plans across insurers is the maturity benefit i.e. if both spouses survive the policy term, there is no maturity benefit as they are pure risk cover plans.

Suitability

A term insurance plan suits youngsters with dependent parents or those especially when members are dependent on the sole earner in the family. Buying a term life insurance policy ensures that the financial goals such as payment of a home loan, children’s education, retirement etc. are not jeopardised if the primary earning member is no more. But when, both the spouses are working and contribute equally towards the financial goals, a Joint life term insurance plan fits the bill perfectly.

Some plans have a unique feature of a joint life term insurance plan that even unrelated individuals such as business partners can buy the policy. Further, some joint life term insurance plans allow parents to hold the policy along with their children.

Benefits of joint term insurance

Joint life term insurance such as Bajaj Allianz Life – Smart Protect Goal helps in keeping things simple, organized and in one place. One can cover not only one’s own life but also the life of his or her spouse in one policy with similar terms and conditions. As two lives are covered under one policy, there is a joint life discount due to which the premium also is relatively reduced thus becoming more affordable. The purpose of insurance being income replacement in case of an eventuality is easily met as both the primary member’s lives in a family are being covered.

Comparison

Buying life insurance is considered one of the first few steps of financial planning. While term insurance plans fit the bill, the joint life term insurance plans serves the purpose well for working couples, especially with young kids and life goals that are quite a few years away.

In a term insurance plan, only one single life is insured while in a joint life term insurance plan, more than one life may be covered. This makes a joint life term insurance plan a more comprehensive plan for complete financial security of the family.

As the life of both the insured, the husband and wife, are equally important, in a joint life term insurance plan, the death benefit pay-out happens on the death of any one insured. Joint Life term plans may also offer separate sum assured for both the individuals.   On the contrary, in a term insurance plan, which covers the life separately, the death benefit is paid to the nominee only if the insured dies.

Conclusion

Sharing is all that makes a married life works. Until the time one’s life goals, dreams and aspirations are shared, it works fine until the happening of an eventuality. In the event of the death of one member, the responsibility falls on the shoulder of the surviving member. For both the spouses, while the journey from planning to accomplishments go hand-in-hand, sharing the financial security through Bajaj Allianz Life – Smart Protect Goal adds the protective layer to the family’s dreams and aspirations. If one opts for a joint life variant, they need not remember different premium payment dates as it would be the same in this case.

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