After you get married, your responsibilities increase. You become emotionally and financially attached to your spouse. If you are a single-income family, i.e., where only one of you earns, you or your spouse shoulders considerable financial responsibility towards the family. In such cases, securing the finances of the family becomes important and a term insurance plan proves relevant. When it comes to term insurance, there is the option of a joint life term plan too that covers both spouses under a single plan. The joint-life term plan can prove to be a good choice for the couple where only one earns. Let’s understand why.
Joint life-term plans – the concept
A joint life policy insures two or more individuals under a single plan. In the case of a married couple; both spouses can be covered under the policy for a single sum assured and one premium. If either of the insured spouses predeceases the other; i.e., dies before the other, the sum assured is paid to the surviving spouse.
For instance, Mr and Mrs Sharma buy a joint term life for a sum assured of Rs.50 lakhs. Under the plan; both the husband and the wife would be covered for Rs.50 lakhs. However, there would be one premium payment. Thereafter, if either the husband or the wife dies, the plan would pay a specified death benefit to the surviving spouse. If the benefit is the full sum assured, the plan would be terminated immediately. However, if the plan pays a portion of the sum assured, it would continue with the remaining coverage. Such a plan would terminate either on the death of the surviving spouse or when the term expires, whichever is earlier.
Relevance of joint life-term plans
It is no mystery that the premature death of the earning spouse causes financial strain for the non-earning one. What is a hidden fact is that the absence of the non-earning spouse also causes a financial loss.
The non-earning spouse manages the household and does various household chores. As such, a caretaker and/or domestic help becomes necessary in their absence. These services do not come free of cost. They incur expenses, expenses which are saved when the homemaker is around to take care of the household. So, if the homemaker passes away, the other spouse incurs a financial loss which is why a term life cover is justified even for the homemaker.
Why joint life plans are effective for single-income families?
Here are some reasons that show why joint-life plans are suitable for single-income families –
One cover for both the partners
The joint-life policy provides combined coverage to both the partners thereby fulfilling their insurance needs effectively. The policy is also easier to service than each partner’s term insurance plans.
Buying a joint life term insurance plan is cheaper compared to buying individual term insurance policies on the lives of each of the spouses. While the coverage on each life is provided up to the sum insured, the collective premium is low and so the plan proves to be cost-effective.
Financial security for the surviving spouse
As the joint-life term policy insures both the partners, it provides them with each with financial security. The non-earning spouse is ensured that in the absence of the earning spouse, the plan would help them out financially. On the other hand, the earning spouse is ensured that in the absence of the non-earning spouse; the plan would pay a death benefit to compensate for the financial loss suffered.
Tax benefits can be claimed by the taxpaying spouse
A joint life policy allows the tax-paying spouse to claim a tax benefit on the premium paid. The premium qualifies for a deduction under Section 80C of the Income Tax Act, 1961. This deduction can be claimed by the earning spouse up to Rs.1.5 lakhs so that his/her tax liability is reduced.
Buying the right plan
While it has been established that a joint life insurance policy can take care of the insurance needs of both partners in a marriage, buying the right plan is where the true test lies. There are different joint-life term plans available in the market. Choosing the right plan requires a little bit of research and a look into your requirements.
Here are some tips on how to choose the right plan –
- Look for a comprehensive scope of coverage. Plans that offer lifelong protection and inbuilt riders would be better.
- Opt for a company with a higher Claim Settlement Ratio and easy claim process. Also, opt for a plan with the maximum enhanced coverage at an optimal cost without opting for the cheapest plan only.
- Opt for an optimal sum assured that would provide the surviving spouse with sufficient financial assistance to fulfil your family’s financial goals.
- Choose the maximum possible coverage duration, ideally lifelong, for complete protection
- If the plan does not offer inbuilt riders, choose the required riders to enhance the coverage.
Look for insurers that have a competitive premium rate without compromising on the coverage.
The bottom line
Secure your family with a joint life-term plan. Ensure yourself and your spouse under a single policy which is easier to manage. Moreover, the policy would provide the desired coverage and would also be cost-effective. A win-win, don’t you think?