Joint VS Single Term Insurance Plan: Which One is Better?

Written by : Knowledge Centre Team

2021-06-07

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Term insurance is an economical way to financially safeguard your family with a huge corpus irrespective of what life has in store for you. The family can still survive and children can continue education as you had planned and envisioned.

Even though you may be diligently saving month-on-month, savings can evaporate when there are financial and health emergencies. Having a comprehensive term insurance policy that gives a guaranteed sum assured and additional benefits in case of accident or total permanent disability is highly recommended. Therefore, life insurance should also find a place in your portfolio in addition to bank deposits, gold, equities, bonds, real estate and other asset classes.

What is a Joint Term Insurance Plan?

A joint insurance plan covers two individuals under a single policy and is designed to cover couples. This plan pays the sum assured on the death of either of the two insured and, in some cases, regular income to the surviving partner.

How does a Joint Term Plan Work?

Assume Mrs and Mr Kini purchased a joint life insurance policy. The convenience of covering both partners in one policy and ease of managing the policy made the couple opt for a joint term plan. Mr Kini, the family's lone income earner, has chosen a sum assured of Rs. 50 lakh. Mrs Kini is eligible to receive Rs 50 lakh from the insurer if Mr Kini dies within the policy's term.

Just like a regular term plan, you and your spouse pay a premium for a specific period to remain jointly covered under the policy. At any point, if either of you, unfortunately, passes away, the sum assured would be paid to the other. However, joint life insurance has a few advantages over two individual policies.

Joint Vs Single Term Plan

A joint life insurance policy is better suited for married couples because it turns out to be cost-effective in the long run. If one of the partners dies, the surviving spouse can claim the full sum assured. The policy remains in force and the surviving spouse is exempt from paying future premiums.

A Quick Comparison

Criterion	Joint Term Plan	Individual Term Plan
Coverage	A single policy covers both	Individual policy for each
Sum Assured	Based on the combined income of both	Based on individual income
Death-Either	Pay-out will be made to the surviving partner. Policy continuance depends on the type of plan	Sum assured paid to the nominee and the policy terminates. The surviving partner is covered under his/her plan.
Death-Both	If both partners die, the sum assured will be provided to the nominee	The sum assured in each policy is paid to the respective nominee
Premium Waiver	Premium waived for the surviving spouse after the death of one	No premium waiver for surviving spouse the policy continues as is
Cover for Homemaker Spouse	Available with a reduced sum assured	Not available to non-working/earning individuals

When to Use a Joint Term Plan?

Your investment portfolio would anyway have multiple FD Receipts, a PPF Account, NPS Account, Gold, Real Estate etc. Managing multiple insurance policies will only add to your woes. Why not simplify by availing of a joint-life policy?

With volatile markets, redundancy of jobs, the emergence of newer illnesses and the rise of nuclear families, you must plan for all situations. People work on gigs, stay home to manage the household or move places for better opportunities. The Sum Assured on a term insurance policy is calculated basis the Human Life Value (HLV) which is estimated to be around 15times the person’s annual income.

The joint-term plan benefits are useful in case either of you plans to become a stay-at-home parent until your child grows up. The Sum Assured is payable in case of unfortunate demise of either parent.

Conventional policies frown to offer life cover to a non-working person.

The iSelect Smart360 Term Plan offered by Canara HSBC Bank of Commerce Life Insurance is designed to fit your unique needs for your family’s safety. The joint term plan makes the combined policy cheaper than buying two separate policies. Another unique feature is the return of premiums option which gives you more peace of mind because you know you will not only get protected but also get all the money back. Additional riders to cover accidents, disability etc make the policy an all-around protection plan.

Some of the features which make this plan unique and extremely helpful as joint life policy are:

a) Joint Life with Homemaker Spouse:

Even when your spouse is a homemaker, her contribution to your and your children’s life is immense. iSelect Smart360 Term Plan allows you to include your homemaker spouse under the same plan.

b) Premium Waiver after the Demise of one Spouse:

The surviving spouse does not need to pay premiums for the continuing life cover.

c) Terminal Illness Benefit:

The sum assured will become payable to the spouse if diagnosed with end-stage life-threatening disease.

d) Include Child Care Benefit:

This is an optional add-on cover which the couple can add to their running policy within one year of their first childbirth.

e) Block the Premium Option:

This option allows you and your working spouse to block the policy premium for a period of five years after the inception. Within this period you and your working spouse can increase your sum assured in the policy without going through the whole proposal process.

Block your Premium Rate

f) Accidental & Critical Covers for Spouse:

Your working spouse can have all the additional cover benefits within the policy without restrictions on the sum assured to term.

Multiple benefits make term insurance a valuable financial planning instrument. If you have dependents, you must protect them against any financial crisis in your absence. Apart from standard saving instruments, term insurance is a must to defend your family against any unforeseen hardships. The sum assured or term insurance cover is the factor which will affect the well-being of your dependents in your absence.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.