Joint Term Life Insurance VS Individual Term Insurance

As more and more women pursue independent careers, be it business ventures or salaried employment, they are becoming a significant source of income for their families. It makes a lot of sense for a married couple where both spouses work to get a joint term insurance plan. In India, a stay-at-home partner cannot buy term life insurance but, under this type of policy, the salaried (or self-employed) partner can cover their partner’s premiums.

• If one of the partners passes away towards the end of the insured term, the other partner remains uninsured after receiving the payout. In such a case, it may not be easy for the survivor to get new insurance due to the age factor.
• In a case where both partners die at the same time, the beneficiary receives the payout for only one.

• One Death Payout: In this kind of arrangement, payments are made to the surviving partner in case of demise of the other partner and the cover is terminated. This is disadvantageous because:

• Lower Premiums: The most obvious benefit of this type of policy is that it would cost less in premiums as compared to two separate term insurance policies for both the partners. However, it may be noted that the terms and condition for what this policy covers will be the same for both. This may not work out for couples where one of them has a job with a significantly higher risk to life.
• One Death Payout vs Two Death Payout: Based on the contract there can be two kinds of payout structures:
• Two Death Payout: This policy mitigates many of the shortcomings of one death payout but, at the cost of higher premiums. There are two payouts; once at the death of one partner, and then again at the death of the survivor. This ensures that both of them are covered throughout the duration of the insured term.
• Divorce: If the policyholders decide to separate within the term of the insurance, they have the option of continuing to pay their share of the premiums. However, if one party decides to stop paying, the other policyholder will have to pay both the shares; otherwise, the contract will be annulled and maybe be without any payouts.
• Stay-at-home Partner: Another advantage of this kind of policy is that it allows the earning partner to cover their stay-at-home partner. Generally, the payout of the secondary policyholder is 50% of the primary policyholder’s payout. One must especially check whether the contract mentions a one death payout or two death payout in these cases.

While joint term insurance provides many benefits to its policyholders, it may not always be ideal for all the working couples out there. Sometimes it may be more beneficial to get two separate term insurance policies.One must closely examine the payout structure of these policies before making a choice. The comparatively lower premiums can be quite encouraging while also allowing stay-at-home partners to be insured. Make sure you consider all the terms and conditions of the policy before making a choice. Also Read: How To Buy a Life Insurance Policy in India

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.