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A Joint Term Insurance Plan or Two Separate Term Plans- Which is better?

By PolicyBazaar
  | Published: 22 November 2019 | Last Updated On: 08 February 2021

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A term insurance plan is the simplest form of life insurance. It offers comprehensive coverage over a period of time, in case the policyholder passes away during the tenure of the plan, the death benefit is payable to the nominee or nominees of the term insurance policy. In case of an untimely demise, a term plan provides a high payout at economical premium rates.

This type of life insurance has recently gained popularity due to the affordability and the coverage offered. This helps the policyholder in ensuring a financial safety net for their loved ones. As a pure life insurance product, the term insurance plan does not offer any maturity or survival benefit. However, it is the most economical option available out there in the market.

In a term plan, the nominee or nominees of the policy receive a lump sum payout in case of the unforeseen demise of the policyholder along with any rider or additional benefits. If you are looking at providing a financial shield for your loved ones, it is important to know and understand which is more beneficial for you, buying a joint term insurance plan or buying two separate term plans.

Before we dig deeper into the pros and cons of a joint term insurance plan, it is important to know what a term insurance plan actually is.

A joint term insurance policy is the insurance cover that is provided on a first-death basis. It provides a payout to the policyholder in case of the death of the other insured partner during the term of the policy. Usually, while opting for any life insurance, you are required to opt for a nominee. In joint term insurance, you and your partner, are the policyholders as well as the nominees. So in an event of an untimely demise of one of the partners, the surviving partner receives the benefit of the cover.

Pros and Cons of a Joint Term Plan

A joint term policy provides a life cover for the couple and has similar terms as that of an individual term policy. Under the joint term plan, both husband and wife are financially covered under the same term policy. On the other hand, in individual term policies, the partners have the flexibility to choose their own conditions and costs as per their individual sustainability and requirements.

If the insured holds a joint term policy, then there is only a single death benefit offered under the plan, even in case of an untimely demise of both the partners, i.e. the beneficiary or the nominee will receive only one payout as the death benefit. Whereas, in separate term insurance policies, the beneficiary or the nominee can receive two individual payouts as a death benefit.

In case of a divorce or separation, the join term plan gets converted into a single term policy. In case any of the partners refuses to pay or does not make the payment on time, the policy lapses until the other partner takes the duty of fulfilling the premium payments.

Some of the joint term insurance policies offer additional riders that can be included in your base policy. For instance, some providers may offer you the add-on where in case of an untimely demise of one of the spouses you are eligible for a regular income till the end of the plan in addition to the death benefit. Some providers also offer accidental death benefit add-on.

Although buying a joint term insurance plan has its own advantages and disadvantages, there are certain aspects that one should keep in mind while planning to buy a policy.

The Final Say

Before locking down a policy, it is important to compare the annual premium that is to be paid under both the joint term plan and the individual term plan. In most cases, joint plans are more affordable than individual plans. If the pricing is on the top of your list, then it is a good option to go for the joint term policy. However, as per your affordability and sustainability, is it good to compare the quotes from different providers, and choose the one that adds the most value for you.

As joint policies have recently gained popularity, it is important to do proper research and comparison before opting for one. You should evaluate the benefits and coverage offered by the joint and individual term plans. before opting for any plan, it is advisable to check on the additional riders and the terms for your policy offered by the insurance provider.

A joint term insurance plan is beneficial for those who are seeking combined financial planning. It is an affordable option that provides a financial shield for your family against any sort of unfortunate events.