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Why Buy Joint Life Insurance

There is a famous saying “You don’t buy life insurance because you are going to die, but because those you love are going to live”. There is no price you can put on the value of a human life, but a life insurance policy attempts to do it.
You don’t need to pray to God any more when there are storms in the sky, but you do have to be insured.
- Bertolt Brecht
For many years the aim of life insurance was to cover the life of the breadwinner of the family. You now live in the age of double income families. Both husband and wife earn and this makes life insurance important for both of them. Double income where both you (husband) and your spouse (wife) earn, means you must know what joint life insurance means.

What is joint term life insurance?

A joint term life insurance plan allows you and wife to buy a single term life insurance plan to cover both of you. If you buy separate term life insurance plans, you would have to pay a higher premium. You can save premiums by availing a joint term life insurance plan. You pay a premium and avail a sum assured in a joint term life insurance plan. You have a primary holder and a secondary holder. The primary holder would be the higher earning spouse (husband or wife). If you/primary holder die, the spouse/secondary holder gets 100% of the sum assured. You must earn a higher income than your spouse to become a primary holder. In case the secondary holder dies, you/primary holder gets only 50% of the sum assured. This is true only if your spouse/secondary holder works. If your spouse is a homemaker (not working), you/primary holder gets only 25% of the sum assured. Many joint term life insurance plans have an inbuilt waiver of premium benefit. If you/primary holder die, your spouse(secondary holder), not only gets the entire sum assured, but also all future premiums are waived off. Your spouse does not have to pay any further premiums to retain the life insurance plan.

Let us understand this by a simple example.

You and your spouse have availed a joint term life insurance policy for INR 1 Crore with an inbuilt waiver of premium rider. You are the primary holder and your wife is the secondary holder. If you/primary holder die, your spouse gets the entire sum assured of INR 1 Crore. Your joint term life insurance policy has an inbuilt waiver of premium rider. Your spouse does not have to pay any further premiums to retain the life insurance plan. Your spouse is the secondary holder and if she is working the cover is for 50% of the sum assured. You get INR 50 Lakhs (50% of the sum assured), if your spouse/secondary holder dies. If your spouse is a homemaker (not working), the cover is for 25% of the sum assured. You get INR 25 Lakhs (25% of the sum assured), if your spouse/secondary holder dies.

Should you avail a joint term life insurance plan?

A joint term life insurance plan means you and spouse together have to pay a single premium, to cover both your lives. You save on premiums, as you don’t take two separate term life insurance plans for you and spouse. It becomes easy to pay the premium on a joint term life insurance plan, if both you and your spouse are working. If your spouse is a homemaker she can still get life insurance up to 25% of the sum assured under a joint term life insurance plan

Remember: If you have availed a home loan and are repaying EMI’s, a joint term life insurance plan with a waiver of premium benefit is necessary.

How does a joint term life insurance plan pay your claim?

Case 1:

There are some joint term life insurance plans which make a payout (pay the sum assured/claim), on the death of either of the policyholders (You or spouse). The joint term life insurance plan ends after the claim is settled. No life insurance is given to the surviving policy holder.

Case 2:

Certain joint term life insurance plans make a payout (settle a claim), on the death of each of the two policy holders separately.

Benefits of a joint term life insurance plan

In case both policy holders die, your children get a lump sum benefit (entire sum assured), or a regular income which will help pay for their education. You can avail an accidental death benefit rider by paying a higher premium. Extra money is paid to your spouse, if you/policy holder die in an accident. You can also avail a critical illness rider where if you/spouse suffer from a critical illness, money is paid for medical treatment.

Tax Benefits

The premiums you pay for the joint term life insurance plan are deducted from your taxable salary up to INR 1.5 Lakhs per year under Section 80 C of the income tax act.

The money your family (spouse and children) receive, on your (policyholders) death, is tax free under Section 10 10(d) of the income tax act. You have to make the final decision on availing a joint term life insurance plan. If you need it, then make sure you avail it.

Insurance
Term Insurance