Two Become One – Buying A Joint Life Insurance Policy

The socio-economic landscape is constantly changing and along with that are our commitments and needs. In the past, the male member of the family was the sole breadwinner and as such the entire family depended upon him for their basic necessities. However, we are now increasingly seeing the emergence of double income households where both the male and the female members of the family work to earn money and support the family’s requirements. Thus, while previously it was fine to purchase a single life insurance policy for the main male member of the house, nowadays it has become imperative to protect the lives of both the earning members. For most families, there are two options to achieve this. They can either buy two single life insurance policies for each member, respectively or they can buy a joint life insurance policy.

What is Joint life insurance policy?

As the name suggests, a joint life insurance policy covers the life of both husband and wife under a single policy. Instead of buying two separate life insurance policy, many couples are now opting to purchase a single joint life policy. There are primarily two variants of a joint life policy. One can either opt to buy a joint term life policy or a joint endowment plan.

Joint Term Plan: Similar to a regular term life insurance plan, in a joint term plan, you and your partner pay a premium for life cover during the policy tenure. In the event of death of one of the policyholders during this time period, a payout is made to the surviving policyholder. Once the payout has been made, the cover expires. The surviving partner will then have to buy another life insurance cover at a revised rate of premium.

Joint Endowment Plan: An endowment policy is a life insurance policy which comes with the added advantage of investment returns. In addition to providing life cover, an endowment policy regularly invests a portion of the premium received which is then paid as a lumpsum amount on the maturity of the policy in case the policyholder survives the policy term. Similarly, in a joint endowment plan, the insurer promises to pay you and your partner an assured payment after the policy expires. This will hold true even if one of the policyholders passes away. Incase one of the policyholder’s dies, then the survivor will not only get the sum assured for the partner but will also be entitled to receive the endowment money after the maturity of the agreed period.

The many variants of a joint insurance policy

The features offered on this policy differ from one insurer to another. Therefore, it is imperative that you fully evaluate and understand the benefits that the various insurers offer under a joint life policy.

Single death payout – most insurers offer a single death payout on a first claim basis. In case of the death of one of the policyholders, the payout is made to the survivor. Once the payout is made, the policy ends, leaving the survivor with no life coverage. It is similar to a single life insurance policy where the nominee or beneficiary receives the payout on the death of the policyholder. The only difference is that in this case, both the partners are covered under the policy and as such both can potentially be the beneficiaries.

Dual payout – there are certain insurers who will pay death benefit on the death of each of the two insured, respectively. In this case, on the death of one of the two policyholders, the payout is made to the survivor. Additionally, the life coverage of the survivor also continues, precluding the need for him/her to purchase another life insurance policy.

Additional benefits – insurers also offer many additional benefits. For example, on the death of either one of the spouses, some policies provide a regular income to the surviving spouse for a fixed period. This regular income is usually over and above the death benefit paid to the surviving spouse. In certain cases, in case the death is due to an accident, an extra amount is paid along with death benefit. Some joint life plans also provide the option of adding a critical illness insurance rider, an accidental death benefit rider or a terminal illness rider to the base policy. However, it is important to note that you might have to pay additional premium for these features.

Which one to choose?

The conundrum that most of us face is whether to buy two separate life insurance policies or to buy a joint life insurance policy. A lot of factors like your age and your spouse’s age, medical conditions, children’s age, total debt and ownership of the debts etc. are important before deciding whether to opt for an individual policy or joint policy. You must judiciously consider the pros and cons of both types of policies, the benefits being offered by different insurers, the cost and then ensure that the policy you decided to purchase meets your specific requirements.