Why Choose Joint Life Insurance?

An interesting study was made by the JSTOR of 50 working couples in a nuclear family. The study showed that having a job was not gender-specific and that both partners were equally active in their professional life.

With both spouses as the breadwinners of the family, it is important for them to be covered under a life insurance plan so any family members dependent on them financially are well-protected.

Having two different policies can be harder to manage and keeping a track of dual premiums might prove to be tedious. Did you know that both spouses can be covered under a joint life insurance plan?

Let’s dig deeper.

A joint life insurance policy covers two lives under a single policy. It offers financial security to both spouses.

Important Note: Joint life insurance plans may cover both working and non-working spouses, depending on the product. If a plan allows a non-working spouse to be covered, the policy will be issued on the basis of the working spouse’s income documents.

The person buying the joint life policy is called the ‘primary life assured’. The spouse is called the ‘secondary life assured’.
The cover amount of a joint life plan can be of two types - separate or shared.

Situation 1: If Sum Assured is separate under the policy
In this case, the cover amounts for the primary life assured and the secondary life assured are separate. The cover amount for the secondary assured may be equal to the primary life assured’s cover amount, 50% of it, or 25% of it.

So -
• If the primary life assured passes away, their cover amount is paid to the secondary life assured.
• If the secondary life assured passes away afterwards, their cover amount is paid to the policy’s nominee.

For example, Gowtham buys a joint term plan with his wife Meena for a period of 35 years and a cover amount of Rs. 60 lakhs. Depending on the policy schedule, Meena’s sum assured is 25% of Gowtham’s, that is, Rs 15 Lakhs. They nominate Geetha, their daughter, as their nominee.

So, Gowtham is the primary life assured and Meena is the secondary life assured.

Let’s say Gowtham passes away in the 25th year of the policy and Meena passes away in the 30th year, this is how the claim will be settled:

Gowtham passes away	Meena passes away
If Gowtham passes away due to a medical condition during the 25th year of the policy, then a sum of Rs. 60 lakhs is paid to the surviving spouse – Meena.	If Meena passes away during the 30th year of the policy due to an accident, then a sum of Rs. 15 lakhs is paid to their nominee – daughter Geetha.

Situation 2: If Sum Assured is shared under the policy
The primary and the secondary life assured share the cover amount and the claim will be paid on a first-death basis. This means that if any of the life assured passes away, the claim amount is paid to the surviving life assured and the policy is terminated.
For example, Harsh and Nalini buy a joint term plan with a cover amount of Rs. 30 lakhs, for a duration of 15 years. Let’s say that Nalini passes away due to a medical condition in the 8th policy year. The sum assured of Rs. 30 lakhs will be paid to Harsh, after which the policy will be terminated.

1. Simple buying procedure
A joint life insurance plan has considerably lesser paperwork than two individual policies. The buying and claims process becomes simpler as well since you will need to get into the process of buying just one plan.

2. Secures both you and your partner
A joint life insurance policy is a great way to ensure the financial protection of both you and your partner under the same plan, especially if you purchase a joint life insurance policy with separate coverage. If one of the life assured dies during the policy tenure, the surviving life assured gets the claim amount. If the surviving assured too passes away during the policy period, then the nominee gets the claim amount.

3. Affordable premiums
Premiums of a joint life insurance policy are comparatively lesser than that of two separate life insurance policies.

4. Easy maintenance
As two lives are covered under one single policy, it is easy to manage the policy and pay the due premiums. It decreases the hassle of maintaining separate plans.

5. Waiver/reduction in premiums
If you opt for a joint life plan with a separate cover, options are given by the insurer to either reduce or completely waive off the balance premium dues if any of the life assured faces an unfortunate death. This can come as a huge relief to the surviving spouse by reducing the stress of paying the premiums.

6. Dual tax benefits³
The tax advantages³ that are offered under the Income Tax Act of India, 1961, for joint life insurance policies are:
• Under Section 80C, you can avail of tax deductions on the premiums you pay.
• Under Section 10(10D), the claim amount paid by the insurance company is also exempt from tax.

You should pick two individual life insurance policies if -
• You have adequate income to bear the premium expenses of two different policies.
• You and your spouse share a wider age difference and your lifestyle choices vary.
• Your insurance needs differ from that of your spouse. For instance, if you want to invest in a plan for retirement income and your spouse wants to invest in a market-dependent plan like a ULIP.
• You are interested in buying add-ons/riders with your policy.

Choosing Joint Life Insurance makes sense if -
• Paying the premiums for a single policy seems more convenient.
• You and your spouse are approximately the same age and also share similar lifestyle choices regarding health and fitness.
• You both have the same needs and requirements, and a single policy can fulfil them.
• You don’t want to opt for any riders, since joint life plans do not offer any.

A joint life insurance policy is a good choice for married couples, especially because it is easier to manage than two individual policies. If you and your partner have the same goals, needs, and lifestyles - go for a joint policy. We hope this article helped you gain enough clarity about how this policy works and whether you should invest in it.⁴