A Joint Term Insurance Plan or two Separate Term Plans- which Option is Better?

A term insurance plan is the purest form of life insurance that provide the life cover during the term of the plan. Under this policy, the insurance company will pay the death benefit amount to the nominee or family in the event of death of the life insured. As it provides only the life cover, a term plan is available with the high sum assured at low premiums.

People are looking ahead to buy the term plan, as it ensures the financial security for the family. This policy provides a lump sum amount to the beneficiary and it is payable, in case of your unfortunate demise during the term of the policy.

When it comes to buying the term insurance plans, you have two options, whether to buy a Joint Term Insurance Plan or two Separate Term Plans to cover the life risk for you and your spouse.

Here, you need to go through a comparative analysis to assess which option is better.

Joint Term Insurance Plan

A Joint Term Insurance Plan usually provides the cover for both the couple. This term insurance plan is available in two types. The first type is ‘First Claim Basis’, under which the sum assured is payable on the death of any of the two policy holders who dies first and the policy ceases, thereafter. The second type of joint term life insurance plan provides the death benefit on demise of each of the life insured. Some joint life policies offer a regular income to the surviving insured and this benefit is payable in addition to the death benefit payable.

It is beneficial, when you opt for the second type of joint life cover. In case of your death, your partner will receive a lump sum sum assured that he/she can utilize to fulfill several financial obligations and in case of second partner during the term of the plan, the sum assured is again payable.

With a joint life insurance cover, you don’t need to assess the needs if something unfortunate happened to you or don’t need to protect the loss of family income that occurred due to your death. A joint term life plan is quite beneficial for couples who are looking to share responsibility towards managing their family’s finances.

For instance, you at 30 years of age opts to buy Bajaj Allianz Term Plan with joint life. You choose this plan with the policy term of 20 years, annualized premium is Rs 10,465 after a high sum assured rebate of Rs 5,635. The sum assured chosen is Rs 1 crore.

The benefit payable is Rs 1 crore on death of the first life insured. The policy continues on the second life insured with the reduced premium and the same amount is payable again on death of the second life insured.

Standalone Term Insurance Plan

A separate term insurance plan provides life cover on a single life insured and on his/her demise, the family or beneficiary will receive the death benefit as a lump sum or monthly benefit (as applicable).

When you are the only earning member of the family, it is essential to provide your family an adequate financial cover, when you are not around. Your death will bring both the emotional and financial setbacks to your family and in this tough time, a term life insurance cover will bring some relief. A typical term insurance plan provides a death benefit to the family, so they can have a sigh of relief to meet their immediate and recurring expenses.

 


Additional Reading:- What is joint Life insurance and when should you go for it?


Say, you at 30 years of age opts for Bajaj Allianz iSecure Online Term Plan with cover for Individual Life. You choose this plan with the policy term of 20 years and the sum assured chosen is Rs 1 crore. The benefit payable under this policy, is an amount equal to the sum assured amount of Rs 1 crore.

When it comes to choosing a term plan, it is essential to assess them based on the cost and the benefits offered under the plan. A separate life cover provides cover on a single life and the death benefit is payable once on the death of the life insured. A joint life insurance cover pays the sum assured on death of each of the life insured, so the death benefit payable is twice compared to a separate life cover.

In view of the example explained above, you can see the joint life cover is far more beneficial, as it provides the same sum assured amount on death of each of the life insured with the same premium amount applicable.


Additional Reading:- Joint Life Insurance for Married Couples in India


Conclusion

A joint life insurance plan provides life cover for you & your spouse and it also ensures a robust financial planning for your family. It provides a dual financial cover with the sum assured payable on death of each of the life insured. If both you and your spouse in a job, it’s wise to buy a joint term insurance policy. A separate term Insurance plan is advisable when you are the only earning member in the family.

Harjot Singh Narula

Harjot Narula is founder and CEO of ComparePolicy.com, an IRDAI approved insurance web aggregator focussed on selling online insurance for companies. Harjot has more than a decade of experience in software development and has also spent 5 years in US working for the mortgage and risk management industry.

Leave a Reply

Your email address will not be published. Required fields are marked *