Smart financial planning requires putting your money in not just the right investments, but also ensuring you have a safety net to fall back on if situations turn bad. Thus, buying robust life insurance coverage is a critical pillar of any financial plan.
A life insurance policy helps to secure your life goals while keeping you and your dependents protected from financial stress. There are various benefits of life insurance plans, but the convenience of financial protection helps you plan a life for your dependents even when you are not around.
Among the different types of life insurance policies, term plans are the purest type of policies. Here, the insurer compensates the dependents of the policyholder in the unfortunate event of demise. This coverage, however, can be extended to cover other situations such as a critical illness using add-on riders. But as you progress in life and your life stage changes, you might be required to even plan for your spouse. This helps the dependents have their financial security in the case of an unfortunate event.
Term plans, which traditionally cover one insured, can now be bought for a married couple using the joint life insurance policy. Thus, it is a popular financial product among married couples seeking to provide insurance cover for each other, as well as for their dependents. Here’s everything you need to know about a joint life policy.
What is a joint life insurance policy?
With a joint life plan, insurance coverage is available for two individuals, usually husband and wife, under a single policy. One of the primary benefits of joint life insurance is that the combined coverage ensures the financial security of the family in the event of the demise of the insured individuals. Similar to standard life insurance plans, the premiums of a joint life plan are to be paid at periodic intervals.
This plan works on the principle of first death, meaning whichever insured beneficiary has an unfortunate demise first, the surviving insured can raise a claim. Thus, a joint life policy expires on the demise of either insured beneficiaries. In case the surviving insured wants to increase the policy coverage, they need to purchase a separate term policy.
Why should you opt for a joint life policy?
Here are some benefits of joint life insurance plans that make it a smart choice:
- Low premiums
When you choose a joint life policy, the premiums are economical and have an affordable premium rate. Thus, insuring your spouse and yourself in one plan does not bring a financial burden and secures more than one beneficiary under one single plan.
- Optional additional income
When you purchase a joint life policy, some plans provide additional benefits of a regular income stream for the surviving policyholder. Thus, in the unfortunate demise of one of the insured, the surviving member may receive a regular income for a specified period of time. Therefore, there is an optional income for the surviving insured along with financial security.
- Financial protection
In the event of an unpredictable scenario of death, a joint life policy ensures the existing financial obligations are covered by the compensation paid to the surviving insured. Nuclear families and young couples can consider buying a joint life policy to enhance the financial security of the family. In this process, a life insurance premium calculator might come in handy.
Other than the above reasons, a joint life policy can be considered for the following reasons:
- The surviving insured receives 50% of the life cover.
- In the unfortunate situation of the demise of both insured beneficiaries, the life insurance coverage is distributed to the nominees of the policy.
- Some joint life policies offer a premium bonus in case the primary insured dies.
- On the demise of one of the insured partners, the compensation under this policy can be received as a regular pay-out or on a lump sum basis based on your requirements.
- The policy premiums are also eligible for deductions in tax computation under Section 80C of the Income Tax Act. However, you must note that these deductions are available only for those taxpayers that opt to pay taxes according to the old regime of computation. The new regime does not enjoy the benefits of these deductions.
Considering life is unpredictable, it is best to get yourself and your spouse insured with a joint life policy. It also acts as a smart option for couples to be insured in a single policy. To know how much coverage you need and the consequent premium, you can make use of a life insurance premium calculator.