Assume Mr. and Mrs. Gokhale buy a joint term plan ensuring a combined sum of Rs. 1 Crore. If Mr. Gokhale, the family's sole earner, meets his demise within the policy term, Mrs. Gokhale will receive the entire assured amount, i.e., Rs. 1 Crore. It is because she was otherwise entitled to Rs. 50 Lakhs in her case. On the other hand, if Mrs. Gokhale, the dependent (in this case), dies within the term, then her husband will receive half of the insurance money.
Joint vs Single Term Insurance Plan – Which Is Best for You?
As term plans guarantee a high lump sum at an affordable premium, these are quite popular. Here, the listed beneficiaries can claim life coverage if the insured individual meets an unfortunate death within the policy term.
The thought of consolidating your family’s financial stability for the time when you may not be around them creates stress. Therefore, it is ideal to understand what will be a reasonable choice between single and joint term insurance. Let us analyse their features in single vs joint term insurance to conclude which may be better.
What Is Single Term Insurance?
What Is Joint Term insurance?
Couples buy a joint term insurance policy as these plans are ideal for providing combined life coverage at more affordable rates. Moreover, in case the primary breadwinner meets an untimely death, this policy will be beneficial in settling all the outstanding bills.
To understand how joint term insurance works, you should learn its types.
- Joint Term Plan: The premium payment is similar to a single term insurance plan. Both spouses furnish the premiums regularly to remain eligible for desired coverage within the tenure. If any of the partners claim the death benefit following an unfortunate incident, then the policy automatically discontinues.
- Joint Endowment Plan: The beneficiaries of this plan receive an amount as endowment if no one dies within the policy period. Thus these plans are ideal for couples considering joint term insurance as an investment apart from a primary protective tool.
What Are the Differences Between Single and Joint Term insurance?
Couples need expert clarification when choosing between single and joint term insurance, especially if they are a first-timer in the life insurance buying journey.
Let us analyse the various parameters of both, single vs joint term insurance.
Single Term Insurance
Joint Term Insurance
Number of Contracts
In single term insurance, each partner can choose life coverage based on their needs.
Joint term insurance plans protect spouses under one contract depending on a single set of conditions.
Single term insurance plans offer variable life coverage to individual partners.
Couples can choose a joint term plan if they own a liability, such as a joint mortgage where cash disbursements must be done twice.
Premium rates for two single term insurance policies will always be higher than a joint term plan, no matter how affordable quotes are offered by an insurer.
Couples and business partners seeking a long-term cost-saving insurance option readily choose a joint term plan.
The length of the policy term is at the discretion of individual partners if they go for single term insurance plans.
The duration must be mutually agreed upon if they buy a joint term insurance policy together.
Which Is Better - Single or Joint Term Insurance?
Depending on the insurable future interests, you must choose between two separate term plans or joint term insurance. Everyone should be prepared for the worst-case scenario while choosing the optimal amount of cover and budget.
- As both beneficiaries of joint term insurance get equal death benefits, no one feels less protected. However, recently, women are progressively assuming various professional roles. So, they prefer individual policies to compensate for any member's monthly income after their unfortunate demise.
- Single term insurance provides more life coverage to the children in case both parents die in an accident simultaneously. But these plans come at a high cost. Hence if you have a tighter budget, you can ensure a guaranteed lump sum payout for your loved ones by purchasing joint term insurance.
Any couple needs to communicate about their choice regarding buying single vs joint term insurance. If you have no budgetary constraints and feel comfortable maintaining two separate contracts simultaneously, you may choose single term insurance plans over joint term insurance.
FAQs about Joint Vs. Single Term Insurance Plan
Ex-couples can hold a joint term insurance policy and will be entitled to the death benefit even if they live separately, followed by a divorce. Only the policyholder can modify the particulars of a term plan or take the decision to discontinue; thus, it continues to exist.
Apart from married couples, business partners and unmarried couples also purchase joint term plans to benefit from them. Financial experts suggest owning one joint term plan to ensure that if there are any liabilities, they can be easily paid in case the primary policyholder dies within the insured period.
Other Important Term Insurance Guides
Other Important Articles Related to Term Insurance
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.