How Does A Joint Term Life Insurance Policy Work?

Life is uncertain, and no one can predict what the future holds. It becomes essential to safeguard our loved ones against unforeseen circumstances. Today, life insurance companies offer a variety of life insurance plans to cater to your unique requirements.

While individual life insurance policies are commonly known, where one person gets coverage. But have you ever considered a joint life term insurance policy? It’s like having a special kind of insurance that doesn’t just protect one person - it’s designed to provide life cover for two lives under a single policy.  

This article will explore how a joint term life insurance policy works and why it might be the perfect plan for your life’s journey together. Let’s dive into the topic!

What is a Joint Term Life Insurance Policy?

A Joint Term Life Insurance Policy is a type of life insurance that covers two individuals under a single policy. It is typically designed for couples, business partners or two individuals who have an insurable interest in each other’s lives.

How Does a Joint Term Life Insurance Policy Work?

A Joint Term Life Insurance Policy is designed to provide dual life insurance coverage where two individuals, often spouses or business partners, are covered under a single policy. The policy provides a predetermined death benefit if either of the insured individuals passes away during the specified term, typically ranging from 10 to 40 years. Policyholders pay regular premiums based on factors such as age, health, and risk profile. The premium payment towards the policy is eligible for tax deductions under section 80C of the Income Tax Act. In the event of the death of one insured individual, the surviving policyholder or beneficiaries receive the death benefit. If both die at the same time, the nominee will get the sum assured. If neither individual dies during the policy term, the coverage expires, and no death benefit is paid.

Example Case Scenarios

Here is an example scenario of how a Joint Term Life Insurance Policy works: -

If Sum Assured is Separate Under the Policy

Arjun, a 35-year-old male, opts for a Joint Term Life Insurance Policy to cover both himself and his wife, Anitha. The chosen base sum assured is Rs. 1 Crore, with a policy term of 30 years. In this scenario, Arjun is the Primary Life Insured (PLI), and Anitha is the Secondary Life Insured (SLI).

Premium Details:-

Insured Life Base Sum Assured Monthly Premium
Arjun(PLI) Rs. 1 Crore Rs.1589
Anitha(SLI) 25 % of Arjun’s Sum Assured Rs.154(Extra)

*The above given premiums are just for illustration purposes only* Compare quotes for the exact premiums.

Benefit Scenario:

  1. If Arjun dies or is diagnosed with a terminal illness before Anitha’s death/terminal illness diagnosis:
    Event Payout to Nominee/Beneficiary
    Death or Terminal Illness of Arjun (PLI) Rs. 1 Crore to Arjun’s nominee
    Inbuilt Waiver of Premium for Anitha (Based on the Policy Chosen) Premiums waived off for Anitha’s life cover
    Death or Terminal Illness of Anitha (SLI) Rs. 25 Lakhs to Anitha’s Nominee
  2.  If Anitha dies or is diagnosed with terminal illness before Arjun’s death/terminal illness diagnosis:
    Event Payout to Nominee/Beneficiary
    Death or Terminal Illness of Anitha (SLI) Rs. 25 Lakhs to Anitha’s Nominee
    Death or Terminal Illness of Arjun (PLI) Rs. 1 Crore to Arjun’s nominee
  3. If both Arjun & Anitha die/are diagnosed with terminal illness together:
    Event Payout to Nominee/Beneficiary
    Death or Terminal Illness of Arjun (PLI) Rs. 1 Crore to Arjun’s nominee
    Death or Terminal Illness of Anitha (SLI) Rs. 25 Lakhs to Anitha’s Nominee

If Sum Assured is Shared Under the Policy

Consider a married couple, Priya and Rohit, who decide to secure their family’s financial future with a Joint Term Life Insurance Policy. They opt for a shared sum assured of Rs. 1.5 Crore and the policy has a term of 25 years. In the unfortunate event of Rohit’s demise during the 12th year of the policy term, the entire Rs. 1.5 Crore sum assured is paid out to Priya, providing her with financial support. Premiums of Priya coverage for the remaining 13 years continue to be waived off (inbuilt waiver of premium). If both pass away together, Rs. 1.5 Crore is paid to the designated beneficiaries (children, for example). Then premiums for the policy cease as the coverage ends.

Benefits of Buying Joint Term Life Insurance Policy

  • Cost-Effective Premiums: Joint policies often have lower premiums compared to purchasing two separate individual policies. This can result in cost savings for the insured individuals.
  • Convenience: Managing a single policy for both individuals is more convenient than dealing with two separate policies. It simplifies premium payments and policy maintenance.
  • Comprehensive Coverage: Joint Term Life Insurance provides comprehensive coverage for both individuals under a single policy. In the event of the death of either insured person, the policy pays out a death benefit, ensuring financial protection for the surviving spouse or partner.
  • Survivor Benefits: Some policies offer survivor benefits, allowing the surviving spouse to continue coverage after the death of the other insured. This can be done without the need for a medical examination, providing ongoing financial security.
  • Waiver of Premium: In the unfortunate event of one insured person’s death or diagnosis of a terminal illness, some policies come with a waiver of premium feature. This means that the premiums for the surviving insured person’s coverage may be waived.
  • Flexibility in Payout Options: Joint Term Life Insurance policies often provide flexibility in choosing how the death benefit is paid out. This can include a lump-sum payment or regular payouts overtime, depending on the policy terms.
  • Tax Benefits: Premiums paid for life insurance policies are often eligible for tax benefits under Section 80C of the Income Tax Act. Additionally, the death benefit received is generally tax-free under Section 10(10D).
  • Business Partnerships: In the case of business partnerships, Joint Term Life Insurance can be used to provide financial support to the surviving partner, ensuring the continuity of the business in the event of the death of one partner.

Top 3 Best Joint Term Life Insurance Plans in India

Company Name Plan Name Entry Age Sum Assured
Max Life Insurance Company Smart Secure Plus Plan 18 Years to 65 Years Rs.10 Lakhs to Rs.50 Lakhs Buy Now
HDFC Life Insurance Company Click 2 Protect Super Plan 18 Years to 65 Years Rs. 5000 to No Limit Buy Now
PNB MetLife Insurance Company Mera Term Plan Plus 18 Years to 60 Years 25 Lakhs to No Limit Buy Now

Who Should Buy Joint Term Life Insurance Policy

A Joint Term Life Insurance Policy can be suitable for certain individuals and situations. Here are some scenarios where considering a Joint Term Life Insurance Policy may be beneficial:

Married Couples:

Married couples often find Joint Term Life Insurance beneficial as it provides coverage for both spouses under a single policy. This can be a cost-effective way to ensure financial protection for the family.

Common Financial Obligations:

Couples with shared financial responsibilities, such as joint loans, mortgages, or children’s education expenses, may opt for a Joint Term Life Insurance Policy to cover these obligations in the event of the death of either spouse.

Couples with Similar Age

Couples who are around the same age and have similar lifestyles such as both being non-smokers, etc. may opt for the Joint Term Life Insurance Policy.

Business Partners:

Business partners may choose Joint Term Life Insurance to protect their business interests. In the event of the death of one partner, the policy can provide funds to buy out the deceased partner's share or cover other financial aspects of the business.

Mutual Dependency:

One partner is financially dependent on the other may find a Joint Life Term Insurance Policy suitable. The death benefit can provide financial support to the surviving spouse, helping them maintain their lifestyle.

Cost Savings:

Joint term life insurance plans often have lower premiums compared to the combined cost of two separate individual policies. This can be appealing for couples looking for cost-effective life insurance coverage.

Convenience:

Managing a single policy is more convenient than managing two separate policies. It simplifies administrative tasks, premium payments, and policy-related documentation.

How to Buy the Best Joint Term Life Insurance Plan Online

The process of buying a joint life term insurance plans in India online has become simple with PolicyBachat. Follow the below steps to buy term insurance online:

  • Step 1: Visit the PolicyBachat website. Click on the ‘Term’ tab. Enter the details such as Gender, Annual income from all the sources, Alcohol consumption and tobacco consumption, Salaries or Self-employed, and Date of Birth.
  • Step 2: Now the premium from different insurance companies will be displayed on the screen. Then you can edit the details such as Coverage Amount, Policy Term, Premium Payment Method, etc., and submit the details to get the desired premium quotes. The premium can be changed by changing factors such as coverage required, mode of payment, etc.
  • Step 3: Compare different plan premium rates, and then select the plan and pay the premium online. After the premium payment is successful, you will receive an email of the premium payment receipt.

Buying Joint Life Term Insurance Plan vs Buying Two Separate Term Insurance Plans

Here are the key differences between buying a Joint Life Term Insurance Plan and buying Two Separate Term Insurance Plans:

Factor Joint Term Life Insurance Plan Two Separate Term Insurance Plans
Coverage Joint coverage for two individuals under a single policy. Separate policies for everyone with individual coverage.
Premiums Generally lower premiums compared to two separate policies. Individual premiums may be higher than the joint policy.
Convenience It is easy to manage a single policy. It is difficult to manage two policies.
Death Benefit Payout Death benefits are paid if either insured die. Paid separately for each insured individual upon their death.
Survivor Benefits Options for the surviving spouse to continue coverage. No survivor benefits
Waiver of Premium This may include a waiver of premium for the surviving insured in the event of the death of the other. No automatic waiver of premium for the surviving insured.
Business Partnerships Useful for business partnerships to ensure financial support for the surviving partner. Each partner needs to have an individual policy, adding complexity to planning for business continuity.
Tax Benefits Eligible for tax benefits under the income tax laws Eligible for tax benefits under the income tax laws
Add-ons You can’t opt for additional riders with most joint life insurance term plans. You can opt for riders if you buy separate term insurance policies.

Also Read: Joint Life Insurance vs Single Life Insurance

Wrapping Up

A Joint Term Life Insurance Policy provides a comprehensive and often cost-effective way for couples or business partners to secure financial protection, ensuring that the surviving individual or beneficiaries receive support in the event of a covered loss. If you and your partner have the same goals, needs, and lifestyles - go for this policy by comparing joint term life insurance quotes online now at PolicyBachat.

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