How Does A Joint Life Term Insurance Policy Work?

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• Introduction
• What Is Joint Life Term Insurance?
• How Does A Joint Life Term Plan Work?
• Benefits Of A Joint Life Term Insurance Plan
• Buying A Joint Term Insurance Plan Vs. Buying Two Separate Term Insurance Plans
• Cost Comparison: Joint Term Insurance Plan Vs. Buying Two Separate Term Insurance Plans
• Premium Comparison Of Top Joint Term Insurance Plans In The Market
• What Are The Types Of Joint Life Term Insurance?
• Eligibility Criteria For Joint Life Insurance Policy
• Documents Required For a Joint Life Insurance Policy
• How To Apply For A Joint Life Insurance Policy?
• Steps To Buy Term Life Insurance Through MyInsureBuddy

Introduction

Today, insurance companies sell a variety of term insurance policies to cater to your unique requirements. A Single Pay Term Plan, for example, requires you to make only a single premium payment. Then, under an Increasing Term Insurance Plan, your sum assured will gradually increase up to a certain maximum limit. A Group Term Insurance Plan covers a large group of people under a single plan. And so on.

In this article, we discuss one unique type of term insurance called Joint Life Term Insurance. Let’s understand how this plan works, its benefits, and more. Let’s dive right in!

So, let’s first start by understanding what is joint life policy!

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What Is Joint Life Term Insurance?

A Joint Life Term Insurance Plan, as the name implies, is a term insurance plan that jointly covers two people. It is also known as a Spouse Term Insurance Plan.

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How Does A Joint Life Term Plan Work?

If you are buying a Joint Life Term Insurance Plan, you will be the ‘primary life assured’ and your spouse will be the ‘secondary life assured’ under the plan. The insurance company will issue the policy based on the income documents of the primary life assured in case a non-working (homemaker) spouse is added.

The sum assured under a Joint Life Term Plan can either be shared or separate. Let’s look at how the plan works in both cases.

1️⃣ Sum Assured Is Separate Under The Plan

If you buy a Joint Life Term Plan where the cover amount is separate for you and your spouse, then the cover amount for your spouse, i.e., the secondary life assured may be either -

• The same as your cover amount, or
• 50% of your, i.e., the primary life assured’s cover amount, or
• 25% of your, i.e., the primary life assured’s cover amount.

If the primary life assured passes away during the policy term, their cover amount will be paid to the secondary life assured. Then, if the secondary life assured also passes away while the policy is active, the nominee will receive the secondary life assured’s cover amount.

Let’s understand this better with the help of an example.

Raman and Isha buy a Joint Life Term Insurance Policy for a duration of 65 years. Under the plan, Raman’s cover amount is ₹2 Crores and Isha’s cover amount is  50% of Raman’s cover amount, i.e., ₹1 Crore. They have appointed their son, Rushabh as the nominee. Now, let’s say Raman passes away in the 40th policy year and Isha passes away in the 60th policy year. Let’s see how much the claim will be paid, and to whom, in both these cases.

• When Raman passes away, Isha will receive the claim of ₹2 Crores.
• When Isha passes away, the nominee, i.e., Rushabh will receive the claim of ₹1 Crore.

2️⃣ Sum Assured Is Shared Under The Plan

If the sum assured under the Joint Life Term Insurance you are purchasing is the same for both you and your spouse, the claim will be processed on a first death basis. This means that the insurance company will pay the claim on the death of the first life assured, and thereafter the policy will expire.

For instance, Ahem and Rinkle buy a Joint Life Term Plan with a sum assured of ₹1.5 Crores and for a duration of 55 years. As per the policy T&Cs, the claim will be payable on a first death basis - and the policy will terminate once the claim is paid. In the 44th policy year, Rinkle passes away. In this case, Ahem will receive the claim of ₹1.5 Crores, and then, the policy will end.

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Benefits Of A Joint Life Term Insurance Plan

Here are a few benefits of buying a Joint Life Term Insurance Policy -

👉 Low premium The premium of a Joint Life Term Plan can be slightly lesser than the premium for two separate term insurance policies.

👉 Simple buying process When you buy a Joint Life Term Plan, you will need to go through the buying process of just one insurance policy. So, the buying process will be easier compared to buying two separate, individual term insurance plans.

👉 Double protection A Joint Term Plan where the sum assured is separate for both you and your spouse offers double financial protection. You will receive the claim if your spouse passes away during the policy term, and vice-versa. And in case both you and your spouse pass away while the policy is active, your nominee will receive the claim amount.

👉 Convenient If both you and your spouse are insured under the same plan, you will have to keep track of a single policy. You will have to pay a premium for only one policy and hence, the policy will be easy to maintain.

👉 Waiver/reduction in premiums Under some Joint Life Term Plans where the sum assured is separate, the insurer may proportionately reduce or completely waive the remaining premiums payable under the policy in case of the unfortunate death of one of the spouses. This minimises the financial burden of paying premiums on the surviving life assured.

👉 Dual tax advantages A Joint Life Term Plan also allows you to avail tax advantages under the Income Tax Act of India, 1961. You can claim tax deductions on the premiums you pay every year under the plan under Section 80C. And, the term insurance claim paid by the insurance company will be entirely exempt from tax as per Section 10(10D).

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Buying A Joint Term Insurance Plan Vs. Buying Two Separate Term Insurance Plans

Here are a few points of difference between buying a Joint Term Insurance Policy and two separate Term Insurance Plans.

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Cost Comparison: Joint Term Insurance Plan Vs. Buying Two Separate Term Insurance Plans

Here’s a quick premium comparison of buying a Joint Life Term Plan and buying two individual term insurance policies -

The premiums in the table are calculated on October 14, 2022. The following are the considerations taken when calculating the premiums -

• For Individual Term Plans:  Premium for ₹1 Crore cover amount, policy duration 30 years, regular pay, 30-year-old non-smoker male: ₹12,008 Premium for ₹50 Lakhs cover amount, policy duration 30 years, regular pay, 30-year-old non-smoker, working female: ₹5976
• Premium for ₹1 Crore cover amount, policy duration 30 years, regular pay, 30-year-old non-smoker male: ₹12,008
• Premium for ₹50 Lakhs cover amount, policy duration 30 years, regular pay, 30-year-old non-smoker, working female: ₹5976
• For Joint Life Term Plan:  Primary life assured: 30-year-old non-smoker male cover amount ₹1 Crore Secondary life assured: 30-year-old non-smoker, working female, cover amount ₹50 Lakhs Policy duration: 30 years Premium payment model: Regular pay
• Primary life assured: 30-year-old non-smoker male cover amount ₹1 Crore
• Secondary life assured: 30-year-old non-smoker, working female, cover amount ₹50 Lakhs
• Policy duration: 30 years
• Premium payment model: Regular pay

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Premium Comparison Of Top Joint Term Insurance Plans In The Market

The premiums in the table are calculated on October 14, 2022. The following are the considerations taken when calculating the premiums:

• Primary life assured: 30-year-old non-smoker male
• Secondary life assured: 30-year-old non-smoker, working female
• Primary life assured’s cover amount: ₹1 Crore
• Secondary life assured’s cover amount: ₹50 Lakhs
• Policy duration: 30 years
• Premium payment model: Regular pay

What Are The Types Of Joint Life Term Insurance?

Some life decisions are best made together, like choosing a joint life term insurance plan to secure the future. This unique approach to life insurance allows you and your spouse to be protected under one policy.

So, if you plan to go ahead with this policy, you will stand to be the primary life assured, essentially the one in the spotlight. Your spouse will then be tagged as the secondary life assured. And, most importantly, here's how it goes: if your spouse is not working, like a homemaker, the insurer is going to have to refer to your income papers while setting up your policy.

Here’s a closer look at the two main types of joint life policy: separate sum assured and shared sum assured. With this, you can determine which type best will protect the life you've built together.

1️⃣Separate Sum Assured: Tailored Protection For Each Of You

When your joint life term plan provides separate sum assured amounts for you and your spouse, the cover for your spouse, the secondary life assured, can be tailored specifically for them. There are a few coverage options to choose from-

• Same Cover Amount: Your spouse is covered with the same sum as you.
• 50% of Your Cover Amount: Your spouse’s coverage is half of yours.
• 25% of Your Cover Amount: Your spouse’s coverage is a quarter of yours.

However, just a heads-up: the terms and conditions of the policy might differ.

Here’s how it works:

If you were to pass away while the policy is still active, the cover amount would be paid to your spouse. Now, if your spouse also passes away during the policy term, then the cover amount is paid out to the nominee. And if, by some tragic chance, both of you pass away at the same time, the nominee would receive both cover amounts, and that would bring the policy to an end.

Let’s say Aarav and Meera decide to take out a joint life insurance policy that covers them for 50 years. Aarav’s sum assured is fixed at Rs 1 Crore, while Meera’s cover is half of that, coming to Rs 50 Lakhs. They assign their daughter, Anya, as the nominee.

Twenty years into the policy, Aarav passes away. As his spouse, Meera receives his cover amount of Rs 1 Crore, helping her stay financially secure. Then, another 20 years later, in the 40th year of the policy, Meera also passes away. At this point, Anya, the nominee, receives Meera’s cover amount of Rs 50 Lakhs, ensuring she’s financially protected as well.

2️⃣Shared Sum Assured: Unified Coverage With A ‘First Death’ Payout

In a joint term insurance plan, where you and your spouse share a single sum assured, the coverage extends to both of you under the same policy amount. The policy follows a "first death" rule, meaning if one of you passes away during the policy period, the insurer pays the sum assured to the surviving spouse. After this payout, the policy concludes.

Let’s understand this further with an example. Imagine Priya and Sameer decide on a joint life term plan with a shared sum assured of Rs 1 Crore, covering them for 45 years. The policy works on a "first death basis," and is designed so that if one of them passes away, the other will receive the Rs 1 Crore payout, and the policy will then close.

Thirty-two years into the policy, Priya sadly passes away. At this moment, the plan does exactly what they intended. It steps in for Sameer, providing him with the Rs 1 Crore claim to help him stay secure. With that payout, the policy fulfills its purpose, bringing its coverage to an end.

Eligibility Criteria For Joint Life Insurance Policy

Before you jump in, there are a few boxes to check on the eligibility list. Here’s a quick and easy breakdown of what most insurers look for when approving a joint life insurance policy -

👉Age Range: The Window Of Eligibility

Both applicants need to fall within a specific age range, typically between 18 and 65. Some insurers might offer coverage even for older applicants, but there could be certain conditions attached.

👉Relationship Requirements: Mostly For Couples, But Not Always

Typically, applicants are usually required to share a specific or predefined relationship, like being spouses. But, some insurers are flexible and might allow friends or other associates to join in, provided certain conditions are met.

👉Health Status: Your Ticket To Affordable Premiums

Health details and medical check-ups are a standard part of the application. Both applicants will be asked to provide their health history and undergo the medical underwriting process. Any pre-existing conditions could influence eligibility and impact premium rates, so it’s best to get those checked out early.

👉Income Documentation: Can You Support The Premium?

Insurers usually ask for proof of income from both applicants to make sure they can handle the premium payments. This is particularly important for policies meant to replace income. If the secondary insured is a non-working spouse, like a housewife, the insurance company will evaluate and issue the policy based on the primary insured's income documents, typically the husband’s.

👉Essential Documentation: The KYC Checklist

Last but not least, be prepared with the paperwork. Expect to provide identity proof, age proof, income documents, and health declarations. Adherence to KYC (Know Your Customer) norms is a must for both applicants to keep everything compliant and secure.

Want to jump into the world of joint life insurance? Check out these essential documents that’ll pave your way!

Documents Required For a Joint Life Insurance Policy

Before purchasing a joint life insurance policy in India, it's essential for both applicants to gather several important documents for submission. Here's a helpful tutorial to walk you through the steps!

👉Identity Proof

First things first, insurers want to know who you are! You’ll need to provide identity proof, which can include options like an Aadhar card, passport, voter ID, driving license, and age proof like a passport or a birth certificate.

👉Proof of Address Requirements

You'll also need to provide proof of address, which can be done with something like a utility bill, bank statement, or rent agreement.

👉Income Proof

You’ll need to show proof of income, which can include salary slips, income tax returns, and even bank statements.

👉Health Declaration

Both applicants will need to fill out a health declaration questionnaire and provide recent passport-sized photos of both applicants.

👉Application Form

You’ll also need a filled-out application form signed by both parties. If it applies, don’t forget to include proof of your relationship, like a marriage certificate or partnership deed.

Lastly, it’s a good idea to check with your chosen insurance provider for any additional documentation they may require. Each company may have specific requests, so staying informed is key!

How To Apply For A Joint Life Insurance Policy?

Before you embark on this journey, you'll need to understand how to apply for one. Fortunately, applying for a joint life insurance policy has never been easier, thanks to two main avenues: online and offline. Let’s explore both options and find the best fit for you!

1️⃣Online Purchase: Convenience At Your Fingertips

In our digital age, purchasing a joint term insurance plan online is not just a trend; it's incredibly convenient! Many insurance companies now make it super convenient to buy policies online. Imagine sitting in your favourite cosy spot at home, coffee in hand, as you fill out the online application form at your own pace. Once you’ve completed the application, paying the premium is simple, with options like credit or debit cards, net banking, or even digital wallets.

Once your payment goes through, you'll get immediate confirmation of your coverage, and the policy documents are usually sent to your email. The online process is often quicker, making it a more efficient experience than the traditional methods.

2️⃣Offline Purchase: The Personal Touch

If you prefer a bit more personal interaction, the offline method may be your ideal path. In the offline route, you can buy the policy directly from the insurer’s branch office or through an intermediary, like an insurance agent or broker. This means you’ll need to visit the branch in person or meet your agent to fill out a physical application form. Payment options can vary, allowing you to use a cheque, demand draft, or even cash, depending on the insurer's policies.

This approach opens the door to personal interaction, letting you dive into your questions and get tailored guidance right when you need it. It’s perfect for those who like hands-on experience or have tricky queries about their policy that need a bit more attention.

Deciding whether to go online or stick with the offline method really comes down to what you prefer, how comfortable you are with technology, and how much help you think you’ll need while buying the policy.

And if you prefer a more guided approach with expert insights, MyInsureBuddy is an excellent choice. As a platform dedicated to helping individuals make informed insurance decisions, MyInsureBuddy combines the convenience of online purchasing with the personalised support of expert advisors!

Steps To Buy Term Life Insurance Through MyInsureBuddy

Thinking about getting term life insurance but feeling overwhelmed? Don’t worry; MyInsureBuddy is here to make the process not just simple, but also enjoyable! With a user-friendly approach, purchasing insurance from MyInsureBuddy is both authentic and personalised.

Here’s how you can navigate through it step by step-

1️⃣Start At The Official Website

Kick things off by visiting MyInsureBuddy’s official website. This is your gateway to expert advice tailored just for you! What’s even better? You get to choose your advisor at no cost, ensuring you receive personalised consultations that cater to your specific needs.

2️⃣Harness the Power Of The Trumatch Feature

Once you’re on the site, take advantage of the innovative Trumatch feature. This calculator asks a series of straightforward questions about your lifestyle, personal and other details. The result? You’ll get tailored recommendations for term insurance plans that suit your unique situation.

3️⃣Compare Plans Like A Pro

With your personalised recommendations in hand, it’s time to dive into the comparison process. MyInsureBuddy makes this easy by allowing you to assess various plans based on their ratings, unique features, and different insurance providers. This way, you can find the perfect plan without feeling overwhelmed by choices.

4️⃣Make Your Selection And Purchase

Once you find the perfect plan, it's time to move forward! Connect with a MyInsureBuddy advisor who will be your go-to expert in understanding the policy’s features, benefits, limitations, and essential customisation options, along with other important details. They will ensure you have complete clarity before making a decision. Once you're confident, proceed with purchasing your policy through them by making the mandatory payment. With all the details crystal clear, you can move ahead with peace of mind.

5️⃣Enjoy Unbiased Recommendations And Friendly Support

What sets MyInsureBuddy apart? All their recommendations are completely unbiased and worth trusting. You can be sure that the advice you’re receiving is in your best interest. Moreover, if ever you have questions or need help at any time, MyInsureBuddy's friendly customer service team will be more than happy to provide you with the assistance needed so that you're never left alone on the insurance path.

Buying term life insurance through MyInsureBuddy is not just about securing your future; it’s about enjoying the process. With a streamlined approach that offers excellent support every step of the way,  it becomes pretty easy to make informed decisions.

So, why wait?

Begin your journey today and take control of your financial future with MyInsureBuddy!

So, that is all about how a Joint Life Term Insurance Policy works. If you have any further questions, you can post them on the MyInsureBuddy Insurance Forum, and get answers from vetted insurance experts, for free!