Life insurance policies have primarily been associated with single policyholders. However, the need to insure multiple people under a single policy arose with rising insurance costs. Moreover, such insurance policies offer beneficiaries comprehensive financial protection. One such type of insurance scheme that has been designed to cater to the needs of couples is known as a joint life insurance policy.
Let’s take a deep dive into what a joint life insurance policy is and why couples should be thinking about it.
What is a joint life insurance policy?
A joint life insurance policy offers coverage to two individuals under a single plan. The premiums for joint life insurance policies are paid in regular intervals, similar to individual insurance plans. When one of the members under the joint life insurance policy passes away, the other member can file a claim for the coverage amount. Once the joint life insurance policy has achieved maturity, no survival benefits are associated with the shared term.
Though a joint life insurance policy is ideal for married couples, any two individuals, whether married or not, can get a policy together.
What are the types of joint life insurance policies?
A joint life insurance policy can be classified in the following two ways:
Joint Term Plan
A joint-term plan has features similar to a regular-term plan. Under the plan, both individuals must pay a single premium for a fixed period. When one of the partners dies, the surviving partner can file a claim for survival benefits. The policy expires after the survival benefits are paid out.
Joint Endowment Plan
It offers the benefits of both investment and insurance plans. The plan is valid for a given period, mostly until the policyholder’s retirement. After this, the insurance company pays a certain amount to the policyholder upon the policy expiring.
Why should couples get a joint life insurance policy?
The primary reason a couple should consider buying a joint life insurance policy is to leverage the premium waiver benefit since it is quite cost-effective in the long run. Under a joint life insurance policy, if one of the members dies, the other member is not required to pay future premiums to keep the joint life insurance policy valid. In the event of the death of the primary policyholder, the joint life insurance policy will continue, and the future premiums will be waived off.
However, when the spouse – not the primary policyholder – passes away, the policy will continue with the same premium requirements.
Furthermore, some joint life insurance policies come with the benefit of allowing the surviving member to decide whether they wish to receive a lump sum amount or monthly payment for 10 years.
When a married couple takes a joint life insurance policy, they can make their child a nominee to the policy. In the event of the death of their parents, the ‘regular income’ feature will help the nominee. The nominee can receive monthly payments or a lump sum amount. The funds can aid the child in completing their education and meeting other financial requirements.
As a couple, a joint life insurance policy brings numerous benefits. Features such as low premiums, additional income, financial protection to the nominee, and the premium waiver benefit are some aspects that make joint life insurance policy a lucrative financial decision. Choosing a plan that aligns with the personal financial goals and risk tolerance of both partners and their shared financial vision as a couple is imperative.