While Term Plans have been the forerunners of life insurance ever since its inception, joint term plans started gaining more prominence after women joined the workforce. Since they also contribute to the family income, they need to be equally insured.

Joint Term Insurance not only provides a safety net for individuals, but it also extends its protective umbrella to include their partners - a prudent choice for couples aiming to secure their family's well-being cost-effectively.

Let's dive into the details of these plans, exploring how they can serve as a reliable foundation for a resilient financial future.

Primarily designed to cover couples, a Joint Term Plan is a term life insurance that covers both spouses in a single insurance policy, thus providing financial protection for both individuals under the same policy.

In the event of the demise of either partner during the policy term, the surviving spouse receives the death benefit, offering the much-needed financial safety net.

It ensures that the family's financial obligations, such as mortgages or education expenses, usually decided based on the family income, are met even if one of the partners passes away.

Joint term plans typically come with affordable premiums and are a practical choice for couples seeking comprehensive coverage to secure their shared future and the well-being of their dependents.

Being a term plan, it provides only the death cover and don't have a maturity benefit.

Based on the receipt of benefits, there are two types of joint term plans:

1. First-to-Die

As the name suggests, under this type of coverage, the death benefit is paid out upon the demise of the first insured partner. Mainly used for income replacement, these plans ensure that the surviving spouse receives financial support, helping to maintain financial stability. After the death benefit payment, the policy terminates in case of joint term plans. 

2. Second-to-Die

Contrary to the first-to-die, second-to-die plans pay the death benefit upon the passing of the second insured partner. Also known as survivorship policies, these plans do not provide financial protection or income replacement to the surviving partner. Instead, the benefit goes to the couple’s beneficiaries.

The purpose of these plans is usually estate planning, preserving assets for heirs and supporting the financial needs of beneficiaries in later stages of life.

1. Comprehensive Coverage for Couples

The most important feature of a joint term insurance is that it provides comprehensive coverage for both partners under a single policy, ensuring a holistic approach to financial protection. This approach simplifies the insurance portfolio for couples in multiple ways, like managing paperwork, paying premiums on time, etc.

2. Save on Premiums

Though term life is the most affordable form of insurance, buying two policies would be more expensive than purchasing a single policy that covers both partners. Thus, the joint term plans are an attractive option for couples seeking robust coverage without burning a hole in their pockets.

3. Easy to Manage

Managing a single joint-term plan is much simpler than handling multiple individual policies. This ease of handling can be especially beneficial for couples looking for a streamlined approach to their financial planning wherein they can keep track of a single policy for premium payments and other paperwork.

4. Shared Benefits for Shared Goals

In today’s time, when both partners share everything, right from financial and home responsibilities to life goals, they need coverage that takes care of their shared goals if their planning is hit by one of their sudden demises.

Joint term insurance is that solution. It allows both partners to contribute to a shared pool of protection as per their planned financial objectives.

Here is how most joint term plans work:

1. Selection of Plan

The first and foremost step is the selection of a plan that is suited to the needs of both partners and is aligned with their objectives. This decision typically includes determining the coverage amount, policy term and any additional riders or benefits.

2. Application Process

Both partners must complete the application process, providing all necessary information and documents. Thereafter, the insurance company evaluates the risk based on both applicants' health and lifestyle factors.

3. Premium

Another critical factor is premium. An amount that is suited for the couple’s budget while being sufficient for their collective goals. Not just the amount, the premium frequency, i.e., monthly, quarterly or annually, must suit the couple’s financial liquidity.

4. Shared Death Benefit

The death benefit is paid as per the type of plan as discussed above. In the case of first-to-die plans, if one partner meets an unfortunate death, the death benefit is paid to the surviving spouse.

However, in the case of second-to-die or survivorship plans, the death benefit is paid to the couple’s beneficiary after the death of both partners.    

5. Policy Expiry or Renewal

The joint term plans usually expire after the death benefit payment, unlike the joint endowment plans that might have the option of continuing the policy for the surviving partner.

They also have a specific policy term, usually ranging from 10 to 30 years. At the end of the term, the policy expires. Couples should carefully consider whether to renew the policy, convert it to a permanent policy, or explore other insurance options based on their current needs.

6. Customization with Riders

Most joint term plans allow adding riders to the base plan. Common riders include critical illness coverage, accidental death benefit, or waiver of premium in case of disability. These riders enhance the coverage and provide flexibility to tailor the policy as per specific requirements.

The major factors on which a joint term plan differs from a single term plan are: 

1. Number of Individuals Covered

One of the significant points of difference is the number of individuals covered in the policy. A joint term plan covers two individuals, while a regular single term insurance covers a single individual.

2. The Death Benefit Payout

In a joint term plan, the death benefit is paid to the surviving partner in case of first-to-die plans. However, in the case of single term plans, there is no such option, and the death benefit is paid only to the beneficiary.

3. Nature of Contract

In the case of a single term plan, the contact is between the insurance company and the covered individual. If there are more than two individuals, there are multiple policies and, hence, different contracts with different terms and conditions.

However, in the case of a joint term plan, a single policy covers both individuals under the same contract with the same terms and conditions.

In today’s financial landscape, especially after the pandemic, when people have realised the importance of financial protection for families and being prepared for unprecedented life events, term plans have emerged as an essential tool of financial protection.

Joint term plans have taken the coverage further by ensuring that both the shareholders in a family’s income are sufficiently covered. However, you must always consider all the pros and cons of a financial product before deciding to invest in one.