Which is Better for a Couple: Joint Term Insurance or Two Separate Term Plans?

The most affordable form of life insurance is a term plan. It offers complete life coverage over a specific period of time, and in case of the death of the insured, the beneficiaries are paid the lump sum. It is important to understand what a term plan is before making a buying decision. A term insurance plan is offered at a low premium. It provides for complete coverage for life. Hence, when you buy a term plan, you can ensure the financial security of your loved ones in case if an untoward event was to occur.

What is a joint life term insurance policy?

As the name suggests, a joint term insurance plan is a single insurance policy for a couple. Such a policy will provide a cover to both, you and your spouse.

How does a joint term insurance plan work?

A joint term insurance plan is a plan where the sum assured is paid out on a first claim condition. It means that the sum assured under the policy will be paid when any one of the two policyholders passes away. If both the insured individuals pass away, the sum assured will be payable to their children. Further, the amount of premium paid and the benefits received on the policy will be exempted from tax.

What should you choose – A joint term insurance or separate term plans?

A joint life insurance plan will provide coverage for you and your spouse and the terms and conditions of the plan are the same as that of an individual plan. In joint term insurance, there will be a combined insurance policy for both husband and wife. This makes it easier for you to keep track of the plan. In contrast, by availing of separate term plans, the couple will have the liberty to choose the conditions, as well as, the cost based on their health and personal requirements. The major difference between the two plans lies in the death benefit. In a joint term insurance plan, a single death payout will be offered to both the individuals under the policy. However, in the case of separate term plans, there will be two separate payouts.

In case of a divorce, the couple can convert the joint term plan to a  single term plan. If one of the partners does not pay the premium on time, the policy tenure lapses until the second partner takes the responsibility to pay the premium. Some joint term plans provide customers with extra facilities. If one of the spouses passes away, the insurer provides a fixed income to the other spouse, on a regular basis, for a specific duration until the policy term is over.

Along with the aforementioned benefits, a joint term plan offers tax deductions. If you are looking forward to do joint financial planning, a joint term plan is ideal for you. You must compare the premium amount payable under both—a joint term plan and separate term plans, and then make a decision. If you are looking for an economical option, you must opt for a joint term plan, as it is affordable and provide you and your spouse with insurance at a low premium.

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Author: Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to editor.webposts@gmail.com.