What is Joint Life Insurance Policy?

Joint life insurance policy, as the name implies, covers both the husband and the wife under a single policy. A combined term plan such as joint life policy will ensure the financial stability of the home in the event that one of the policyholders passes away. The premium for joint life policy must be paid in regular intervals, just like an individual term plan. If one of the members passes away within the policy's term, the other can file a claim to get the coverage amount. There is no survival benefit connected with a shared term insurance plan after it achieves maturity.

How Does Joint Life Policy Work?

Once you understand what is joint life policy, you can plan your finances more efficiently. It will help you align your hard-earned income into instruments which can further enhance the financial security and prosperity of your loved ones.

Let’s understand what is joint life policy and how it works.

  • Many joint life insurance policies available today provide coverage for the policyholder's spouse of up to 50% of the sum assured value.
  • In the event that the primary insured dies, joint life insurance plans provide a fixed monthly payout to the spouse. This also depends on the predetermined frequency of the payout by the policyholders.
  • In case of the untimely demise of one of the policyholders, the policy remains active. In that event, the sum insured is distributed to the surviving partner in accordance with the terms of the joint life policy.
  • You may also find some joint life policies which waive off premiums in case of one of the policyholder’s demise to reduce the financial burden over the surviving partner.
  • If both of the policyholders do not survive due to an unfortunate circumstance, the sum assured is distributed to the policy's beneficiaries or legal heir.
  • If one of the spouses is unemployed, the total sum assured amount for joint life insurance policy cannot exceed the primary insured's maximum sum assured amount.

Types of Joint Life Policies

If you are looking for a joint life insurance policy to get comprehensive protection, you have alternatives available, much like as it is with a regular insurance plan. It could be an endowment plan or a straightforward term plan.

Let’s take a look at what is joint life policy types available for policy buyers:

1. Joint Term Plan

Similar to a regular term plan, you and your spouse pay a premium for a certain period of time to remain covered under a joint life policy. During this period, you can claim for the life cover amount if one of you meets with an unfortunate incident. Once this is done, the coverage of the joint life policy will cease.

2. Joint Endowment Plan

The combined endowment plan provides both investing and insurance benefits. It is valid for a specified amount of time, usually before your retirement begins. When your coverage expires, the insurance company will pay you a sum of money, which is referred to as endowment. A joint endowment plan works similarly to a regular endowment plan, with the exception that the endowment plan will pay the insured couple when the insurance has expired.

Benefits of Joint Life Policy

A joint life policy has various advantages. Some of the many benefits you stand to gain by investing in this type of insurance plan are briefly discussed below:

1. A Joint Life Policy is Less Expensive

One of the most noticeable advantages of purchasing a joint life insurance policy is the cost savings that come with it. Joint life policy has significantly lower premiums in comparison to other policies. Hence, you can enjoy the benefit of dual cover at an affordable price

2. Replaces Income in the Event of the Insured's Death

In the event of the insured’s demise, the beneficiary can benefit from the monthly instalments provided by the policy, which will help them better arrange their budget and provide a constant stream of income. As the policyholder, you can choose the payout method of the policy between lump sum and monthly installments, depending on the needs of your family.

3. Tax Advantages on Premiums Paid and Death Pay-Out from a Joint Life Policy

The premiums paid for the policy are deductible under Section 80C of the Income Tax Code (Income Tax Act). Aside from that, the death benefit received by the recipients is tax-free under Section 10 (10D).The premiums paid for the policy are deductible under Section 80C of the Income Tax Code (Income Tax Act). Aside from that, the death benefit received by the recipients is tax-free under Section 10 (10D).