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Joint Life Insurance Policies

25 Oct 2022

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Our family is all we have. The small moments in time we create with them become memories of a lifetime. And all we want to do is keep them safe, protect them from the uncertainties of life. Life Insurance stems out of this very maxim, i.e., to look after your loved ones financially, even when you are not around.

You share a home with your partner. But did you know you could also share a life insurance policy with them?

Well, that’s what this article is all about. Presenting to you - Joint Life Insurance Plans - covering two lives under one plan.

What is a Joint Life Insurance Policy?

As the name suggests, it is a policy that provides coverage to two people under a single plan. If you are the one buying the policy, then you will be the ‘primary life assured’, and the person you jointly own it with will be the ‘secondary life assured.

It is a great option for married couples - to provide financial security to their better half. And based on the income documents of the primary life assured, joint life cover for a homemaker or a non-earning life assured/spouse is available, too.

How does a Joint Life Plan work?

Situation #1: If Sum Assured is separate under the policy

If you buy a Joint Life Policy where you (primary life assured) and your spouse (secondary life assured) have separate cover amounts, then the cover amount for your spouse, depending on the product, will be -

The same as your cover amount, or
50% of your cover amount, or
25% of your cover amount.

For example, ABSLI DigiShield Plan offers the secondary life assured 50% of the primary life assured’s cover amount.
Now, if you, the primary life insured, pass away during the policy term, your cover amount will be paid to your spouse (secondary life insured). Then, if your spouse, too, passes away while the policy is still active, their cover amount will be paid to the nominee.
Let’s simplify this - with the help of an example.
Shruti buys the ABSLI DigiShield Plan with a sum assured of Rs. 50 lakhs for a duration of 35 years. While buying the policy, she opts for Joint Life Protection Option and jointly owns the policy with her spouse, Raghav. As per the policy schedule, the sum assured applicable for Raghav will be 50% of the sum assured applicable for Shruti. Therefore, a sum assured of Rs. 25 lakhs (50% of Rs. 50 lakhs) will be offered to Raghav.

Shruti will be the primary life assured, and Raghav will be the secondary life assured. They have appointed their daughter, Mrinal, as the nominee.
Now, let’s assume Shruti passes away in the 25th policy year and Raghav passes away in the 30th policy year. Let’s see how the claim will be paid -

Shruti passes away	Raghav passes away
Let’s assume Shruti passes away due to an accident in the 25th policy year. In this situation, the insurance company will pay the claim of Rs. 50 lakhs to the surviving spouse, i.e., Raghav.	Let’s assume Raghav passes away due to a stroke in the 30th policy year. In this situation, the insurer will pay the claim of Rs. 25 Lakhs to their daughter (nominee), Mrinal.

Situation #2: If Sum Assured is shared under the policy

If you buy a Joint Life Policy where you (primary life assured) and your spouse (secondary life assured) have a shared cover amount, the claim will be processed on a first-death basis. This means, the insurer will pay the claim on the death of the first life assured, and then the policy will be terminated.

Let’s take an example.

Gaurav and Tanya buy a Joint Life Endowment Plan with a sum assured of Rs. 25 lakhs, for a duration of 10 years. As per the policy T&Cs, the claim will be paid on a first-death basis - and once paid, the policy will expire. In the 7th policy year, Tanya passes away due to a heart attack. In this situation, Gaurav will receive the claim amount of Rs. 25 lakhs, and then, the policy will end.

Advantages of a Joint Life Policy -

Keeps you and your spouse covered under Life Insurance

If you buy a joint life policy where the sum assured is separate, and your spouse dies during the policy term, you will receive the claim amount and vice-versa. And if both of you, unfortunately, pass away while the policy’s still active, your nominee will receive the claim amount. Therefore, a Joint Life Policy keeps you and your loved ones financially protected.

Simple buying procedure

When you buy a Joint Life Policy, you don't need to go through the buying process of two insurance policies. There will be less paperwork involved, fewer hassles at the time of purchase, etc. - the buying process is easier compared to buying two separate, individual policies.

Easy maintenance

Reduces the hassle of managing separate policies, as two lives are covered under a single plan. It becomes easier to keep track of the policy premiums and renewal.

Affordable premiums

The premium of a Joint Life Policy may be slightly lesser than the premium you will have to pay for two separate life insurance policies.

Waiver/reduction in premiums

Under Joint Life Plans with a separate cover, the insurer will reduce or completely waive off the remaining premiums payable under the policy - in case one of the spouses meets with an unfortunate death. This takes a financial load off of the surviving spouse.

Dual tax benefits¹

Joint Life Plans also offer tax advantages under the Income Tax Act of India, 1961.

Under Section 80C, you can avail tax deductions on the premiums you pay every year under the policy.
Under Section 10(10D), the claim amount/sum assured paid by the insurance company is also exempt from tax.

Now, two Individual Policies or a Joint Policy - which one is for you?

Choose two Individual Life Policies, if -	Choose a Joint Life Policy, if -
You and your partner have a wider age difference and dissimilar lifestyles.	You and your partner are approximately of the same age and have matching lifestyles (both are smokers or non-smokers, etc.)
Your insurance needs differ from that of your spouse.	You both have the same needs and requirements, and a single policy can fulfil them.
Your budget is enough to accommodate the premiums for two separate policies.	You want to save on policy premiums.
You want to add riders and make your policy more comprehensive.	You can’t opt for riders with most joint life insurance policies.

Wrapping up!

A joint life policy is a great option for married people, especially if you are the sole breadwinner of the family. This way, you can financially protect your spouse - even when you are not around. They can take over the responsibilities you had, run the family, and lead a comfortable life - without facing any financial trouble. Also, bundling two policies into one is a tad more affordable option than buying two individual life insurance policies. Assess your needs, do your research, and get a policy that’s better for you and your better half.

¹ Tax benefits are subject to changes in tax laws. Kindly consult your financial advisor for more details.

ABSLI DigiShield Plan (UIN: 109N108V09) is a non-linked non-participating individual pure risk premium life insurance plan.

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