Individual Term Insurance Vs Joint Life Term Insurance

You and your partner are sitting in a restaurant and enjoying a candlelight dinner. You look into each other’s eyes and smile with glee. Just then, your partner surprises you with a wrapped gift. You open it to find out a pregnancy kit that says “POSITIVE”!! You are head over heels in happiness, and you just cannot hold your horses!

You continue your romantic dinner and dream so much about your future with your child. You talk about buying your own cosy home, planning a babymoon, and also about the excitement of starting a family together. While you speak of all this, a sudden thought crosses your mind. What if something unexpected happens? You want to stop such a thought during such a happy moment, but hey! You know that it is something very important to think about!

You immediately discuss with your partner about buying a term insurance plan for couples. You let him know that term insurance is not just preparing you for the worst, but it helps ensure that your dreams stay alive through your better half. This plan becomes your ultimate safety cushion that promises financial security.

But how do you choose the best plan that fits both your needs? Is it better to get individual term insurance for each or choose joint life term insurance? Understanding this could make all the difference in protecting your shared goals and aspirations. Let’s get to the details in the article below.

First, let us get clarity on what each plan has to offer.

What Is Individual Term Insurance?

An individual term insurance policy is a type of life insurance meant to provide financial coverage for your dear family within a set-out time frame. Under this plan, the selected nominee will get a death benefit if the policyholder passes away within the policy duration. This simple and practically effective option is usually purchased directly by the individual from an insurance platform.

Let's take a closer look at it -

As with any other term insurance, your insurance company will pay your family an agreed-upon amount if you pass away during the policy's term. However, if you live longer than the policy's term, there won't be any payout from the insurer. It works like this because the plan is a pure-risk life insurance policy. This implies that its whole focus is on risk coverage and does not include any savings or investment components.

What should you do?

You have to pay the premiums on time to maintain the coverage. Think of your premium payments as a commitment to protect the financial future of your family. In this way, you may be proactive and ensure that your dear ones have financial security no matter what.

For example,

Rakesh is a marketing manager. He buys his dream car by getting a car loan. Rakesh was also a very responsible son. He wanted to make sure that his family did not face any difficulty if something happened to him. Thus, Rakesh buys a term insurance policy with a sum assured of Rs. 50 lakhs. This means that in case of an unforeseen happening, his family will get a payout of Rs. 50 lakhs, according to the claim payout option he chose at the time of investing in the policy. This will help his family to proceed with their lives without any financial strain.

What Is Joint Life Term Insurance?

As the name implies, a joint life term insurance plan provides coverage for two people under a single policy. This plan is specially designed for those love birds who want to safeguard their future together. It is also known as a spouse term insurance plan.

How does the plan work? When you get a joint life term insurance policy, you become the "primary life assured". This makes your spouse the ‘secondary life assured’. But what if your spouse is a homemaker? In this scenario, the insurance provider bases the coverage on your paycheck records.

Let’s take the example of Rakesh again -

Say Rakesh gets married to Shriya - the love of his life. They both work at the same office and earn well. Together they buy a new home by getting a home loan. They plan every single detail for their future. Both Rakesh and Shriya know the need for a term insurance policy and buy a joint life term insurance with a sum assured of Rs. 1 crore. They regularly paid their premiums.

Six years later, Rakesh passed away in a car accident. This put Shriya in complete shock. However, their term insurance policy came to her rescue and paid her a death benefit of Rs. 1 crore. It made sure that Shriya could continue living their dream on behalf of her beloved husband.

For married couples looking to secure financial stability as well as that of their children, this plan is an excellent option. Depending on what works best for you, the sum assured may be kept separate or divided between the two spouses.

Let’s take a closer look at how this plan unfolds in both scenarios.

• Separate Cover Amount: In the case of separate cover amounts within a joint life policy, where you (the primary life assured) and your spouse (the secondary life assured) have individual cover amounts, the process goes like this - If you, as the primary life insured, pass away during the policy term, your spouse receives your chosen cover amount. Then, if your spouse also passes away while the policy remains active, their cover amount will be directed to the nominee.

• Shared Cover Amount: Alternatively, if you opt for a joint life policy with a shared cover amount, things operate differently. Here, the claim is handled on a first-death basis. This implies that the insurer will quickly pay the claim following the demise of the first life assured (you or your spouse), at which point the policy will terminate.

So, when comparing individual term insurance vs joint life term insurance, which plan should you choose? Are you confused? Don’t worry! We will get it cleared for you.

Difference Between Individual Term Plans And Joint Term Plans

Here are some of the differences between individual term insurance and joint life term insurance to help you understand which one suits you best -

To Sum It All Up,

It all comes down to figuring out what best suits your two lives when choosing individual term insurance vs joint life term insurance. The important thing is to secure your future jointly, whether you choose individual policies or a combined plan. You should consider your ages, your lives, and the reason why you both require protection. Remember that it is not only about today; it is also about getting ready for the unknowns of tomorrow. You are taking a critical step towards guaranteeing^# peace of mind for yourself and your loved ones by being aware of your term insurance options and opting for one that meets your needs as well as your dear family.