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Joint Term Insurance Plan or Two Separate Term Plans – Which is Better?

A term insurance policy can provide cover to the nominees of the policyholder in case he/she passes away during the term of the plan. But it covers one individual. Joint term insurance provides cover for both partners.

In this article, we will understand the differences between a joint term insurance plan and two separate individual plans.

In order to ensure their family’s financial security, many people purchase term insurance. A term insurance plan can provide a sum assured to the dependants of the insured person in case he/she passes away during the term of the plan. However, such a plan covers a single individual. But if a couple wants to get cover under one plan, then they can opt for a joint term insurance plan.

What is a Joint Term Insurance Plan?

In many families, both the partners are working. Therefore, it has become important to get term insurance for both members. While they can opt for individual term plans, they also have the option to choose a joint term insurance plan.

A joint term insurance plan covers both the partners in one plan. The sum assured can be offered when any one of the policyholders passes away during the tenure of the policy. In case both the policyholders pass away, then the sum assured is paid to their children.

Joint Term Insurance vs Individual Term Insurance

The Sum Assured

  • In case of joint term insurance, the sum assured is provided under one single plan.
  • Terms of coverage will be the same for both partners.
  • The sum assured amount will depend on the annual income of both the policyholders.
  • In case of an individual term insurance plan, the sum assured is based on the insured person’s annual income.

Coverage

  • A joint term plan covers both the partners in one plan.
  • In case of an individual term plan, a single individual is covered.

Premium

  • For joint term plans, there is a single premium payment that consists of both the partners’ premiums.
  • The individual must pay the premium for himself/herself for an individual term plan.

What Happens If One Partner Passes Away During the Tenure?

  • In case of a joint term plan, the sum assured can be paid to the surviving partner. Waiver of future premiums and policy continuance will depend on the claim payout option selected by the policyholders.
  • In case of an individual term plan, the sum assured can be given to the beneficiary. The other partner will stay covered in his/her separate term plan.

What Happens If Both the Partners Die During the Tenure?

  • In case of a joint term plan, the legal heir can receive the sum assured.
  • In case of separate term plans, the sum assured from both the policies can go to the legal heir.

Buying a term insurance plan is crucial for providing your family with financial protection. Keep the aforementioned points in mind while making a decision between a joint term plan and separate individual term plans.

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