Insurance planning
Joint Term Plan Insurance-Should you buy or not?
Term insurance are there in the market from quite a long time.These type of insurance get an upper hand to the traditional plans in terms of premium and sum-assured.
Term plans for individual is ideal for one person but now a days when both husband and wife are earning member than why to buy separate term insurance and why not buy a Joint Life Term Insurance?
Many companies offers you such plans where you get the convenience of getting two plans in one.These companies also have plans for non working spouse,so if this is the case,spouse does not need to produce income proof.
The need for such plans has emerged with the emergence of ‘double income nuclear families’, wherein both the earning members contribute towards meeting household expenses and all aspects, such as lifestyle, loans etc, are planned based on this .
Suppose Aakash and his wife Reena buy Joint life term insurance policy.
- Case 1: If Either of one dies,the other will receive sum assured and the life risk will continue up the policy period.
- Case 2: If both dies, the nominee will receive the sum assured and policy terminates itself.
- Case 3: If both survives till the policy period, No maturity amount will be given as it is pure term plan.
Separate or Joint – which to buy
- First Claim: Insurance companies pay only the first death claim amount in the event of any one’s death in joint plan . After than the policy stop there.However there are riders in some policies by which they entail payment of sum assured upon demise of each insured partner.
- One Payout: Suppose both the couple dies in an accident than the nominee will receive only one death payment.In case of separate policies the nominee will get two pay-outs.
- Divorce: In case of divorce, the insurer may not allow you to be jointly covered under the same plan. Only the Principal Life Assured will continue to be covered under reduced premium.
- Price: Joint term plans are cheaper than the separate plans.
Examples of Joint Term Insurance Policies
Bajaj Allianz iSecure:
In Bajaj Allianz iSecure plan,In the event of death of one of the life assured, the Sum Assured is paid out and the policy continues with reduced premium. The policy terminates with payment of Sum Assured after death of second life assured.
Aegon Life iSpouse:
In Aegon Life iSpouse plan the death benefit (Sum Assured) is paid on the first death basis. Hence, the insurer pays the Sum Assured on death of Principal Life Assured or the spouse. The insurance plan ceases on the payment of Sum Assured.
PNB Metlife Mera Term Plan:
In PNB Metlife Mera Term Plan,they allows coverage for the spouse only up to 50% of the Principal Life Assured.So if you purchase term cover of Rs 25 Lacs under joint life plan, cover for your spouse will be Rs 12.5 Lacs.
There are more companies which offers you such plans apart from the above three.
Conclusion
There are nothing wrong in these type of term plans.Its all about personal choices and preferences.Joint plan offers you convenience and ease of documentation in terms of coverage for both partners at one go and Separate plans gives you flexibility.
In case where the age difference between husband and wife is not much any good joint plan may be considered. However, in case where the age differential between husband and wife is large,one should look for policies where the age of both the lives is considered for premium determination, as you will be able to save on the premium. Alternatively you may also opt for separate policies.
