Joint Term Insurance or Two Separate Plans – Which One Should You Choose

A traditional term insurance plan makes provision for a single policyholder. Under this scheme, the policyholder’s nominee can claim a sum assured upon the policyholder’s death during the tenure of the term insurance. Mostly, people who do not have a working spouse or are the primary earning members in their family opt for a term insurance plan. However, a major advantage that a term planoffers over a traditional insurance planis the low premium offered. To cashin on this economical insurance option, a lot of married couples are opting for a joint term insurance plan.

What Is A Joint Insurance Plan?

Nowadays, a lot of women are joining the workforce and contributing equally to the household and financial responsibilities. Thus, along with their spouse, women too are taking responsibility to take out a term policy to secure the financial future of their children. On seeing a rise in the number of couples taking out two separate term insurance plans, a lot of insurance companies have come up with a joint term insurance scheme. A joint term insurance offers provisions to cover two people (the policyholder and his/her spouse) under a single contract.

How does Joint Insurance work?

Both the partners covered under a joint insurance pay a combined premium under the single insurance plan. The payout made under this plan is dispersed in two ways-

  • If either one of the policyholders diesduring insurance tenure, some insurance companies grant the sum assured to the surviving partner and the policy gets terminated.
  • On the other hand, some insurance companies only offer the sum assured to the nominee when the last surviving policyholder has passed away.

Joint Term Insurance Vs Two Separate Plans

Joint Term Insurance Two Separate Term Insurance Plans
A joint term insurance can be enjoyed by paying a combined premium. When you buy two separate term insurance plans, you have to pay two separate premium amounts.
Both the policyholder share the same tenure. Since they are two separate policies, the tenure can be same or different for both the policyholders.
If during the course of tenure, one of the policyholdersdie; the surviving partner may or may not get the sum assured, depending on the provisions of the joint term insurance plan. When the partners have two separate term insurances in place, the surviving partner can enjoy the death benefit on the term insurance policy of the dead policyholder.
The sum assured under a joint policy term is decided based on the combined income of the policyholders. The sum assured on different policies may vary depending on the individual income of the policyholders.
In case both the policyholders die at the same time, a single sum assured is paid to the nominee under a joint term insurance plan. In case both the policyholders die at the same time, the nominee can claim two separate payouts from two different policies.
If during the joint insurance tenure, the couple decides to go their separate ways, the joint insurance policy can be dissolved on informing the insurance company. In case a couple decides to go their separate ways, there is no need to alter the provisions in an individual term insurance plan.

What to Choose?

As is evident from the above comparison, you can enjoy term insurance benefits on separate as well as joint term insurance plans. Separate term insurance can prove ideal for working partners with similar annual incomes. However, a household where one of the spouses works on a lower pay scale or is a homemaker, maximum benefits can be reaped from two separate term plans.

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