Joint Life Policy- All You Need to Know

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 Insurance Plan Work?

In joint life insurance, the primary life assured is the person purchasing the policy, while the spouse is considered as the secondary life assured. Here the cover amount can be structured in two ways: separate or shared. In the separate option, each individual has its own designated sum assured. In the shared option, the sum assured is combined and covers both individuals. We have explained both these options in detail in the next section.

Types Of Joint Life Insurance Plans

As discussed, there are 2 common categories in which we can categorise joint life insurance plans. Let's see how the policy works in both situations i.e. separate or shared.

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 (UIN: 109N108V13) 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, her/his cover amount will be paid to the nominee.

Let’s simplify this - with the help of an example. Shruti buys the ABSLI DigiShield Plan (UIN: 109N108V13) 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 -

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. If case of death of both the lives simultaneously The sum assured on death in respect of the primary Life Insured as well as sum assured in respect of secondary Life Insured will be paid to the Nominee and the Policy will be terminated.

Why Should You Buy Joint Life Policy?

There are multiple benefits to consider when getting a joint life insurance plan. Here are a few key reasons:

• Generally life cover is not available to non-earning members. However, a joint life plan allows your housewife to have one - based on your income documents.
• The surviving partner can use the death benefit to cover daily living expenses, childcare, and more, alleviating the financial strain of being a single parent.
• In the unfortunate event that both parents pass away, this plan ensures that children have sufficient funds to maintain their standard of living.
• Joint life insurance plans offer affordable premiums, easing financial strain and providing security at an affordable rate for two individuals.

Features Of Joint Life Policy

Here are some of the features to consider:

• Joint life insurance provides coverage for two individuals under one policy.
• If both partners pass away simultaneously, the designated nominee (usually their children) receives life cover.
• Joint life cover policies are more affordable than individual insurance policies.
• This plan is customisable to meet both partners' needs.
• Under one of the categories, the premium is waived off in case of one partner's death during the policy tenure.
• It allows convenient management with a single joint life policy.
• It involves simplified paperwork, premium payments, and administration.

Benefits Of Joint Life Insurance Policy

Let's look at some of the key benefits of a joint life insurance policy.

• Double financial protection provided through separate sum assured for both partners.
• Requires minimal documentation procedures - compared to buying separate individual policies.
• Premiums are reasonably priced and can fit within your budget.
• Ideal for those who may have struggled to purchase two individual life insurance policies.
• Flexibility to customise the policy according to each partner’s needs.

Who Are Eligible To Get A Joint Life Policy?

In India, a joint life insurance policy is usually designed for married couples. However, it's worth noting that certain insurers may also offer this type of policy to business partners, depending on their specific policies. It's important to mention that the primary assured person must be an earning individual. If your spouse or secondary life assured happens to be a housewife, you will need to provide specific documents as listed by the insurance company. Ultimately, the policy will be issued based on the income documents of the primary life assured.

Advantages Of A Joint Life Policy -

Let’s look at some of the advantages

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 benefits Joint Life Plans also offer tax benefits^* 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?

Please note that the terms and conditions may vary across insurers and 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.