Joint Term Insurance Plan

None of us can predict what the future may bring because of the uncertainty of life. In the face of uncertainty, you may want to do everything you can to protect your future and your family’s needs.

One of the safest ways to achieve this can be to get term insurance for you and your family. If something unfavourable were to happen to the family’s breadwinners, the remaining family members would have a financial safety net to fall back on.

What is term insurance?

In essence, a term insurance plan is a type of life insurance that provides the insured with a pure life cover in return for the payment of an insurance provider-imposed premium.

The protection that comes with a term insurance policy only lasts for the term duration of the policy chosen. If the policyholder passes away within the policy’s term, death benefits get paid as a lump sum to the nominee or the insured’s legal heirs.

What is joint term insurance?

Joint term insurance policies usually protect couples since they cover two people under one policy. This is a complete strategy that benefits both teams in various ways. If one of the two people insured by the policy passes away, a payout is provided, and in some cases, the surviving spouse is also given ongoing compensation.

Joint-term insurance may be better than getting separate plans for each spouse, especially for young couples. The need for each pair to have their insurance coverage gets diminished by mutual insurance.

Both teams get covered under the same plan, making tracking and monthly payments relatively easy. In a combined plan, the sum assured can be based on the primary policyholder’s age, health, income, and way of life. It has become convenient to check the breakup of premium rates using an online term insurance calculator.

How do joint-term insurance plans work?

The first-casualty foundation theory underlies the operation of a combined term policy. This implies that the insurance company can make a lump sum payment to the remaining life insurer if one of the two people jointly covered by the policy passes away while the policy remains active.

Let’s examine the definition and operation of joint life insurance –

  • Today, combined life insurance policies cover the policyholder’s spouse for up to 50% of the assured value.
  • Joint term insuranceplans offer a fixed monthly benefit to the surviving spouse if the primary insured passes away. This also relies on the policyholders’ predetermined frequency of payouts.
  • The policy can still be in effect even if one policyholder suddenly passes away. In that case, the surviving partner receives the covered amount under the joint life insurance policy provisions.
  • To lessen the financial strain on the remaining partner, you could also find joint life policies that waive premiums if one of the policyholders passes away.
  • The sum assured is paid out to the policy’s beneficiaries or legal heir in the terrible event that both policyholders pass away.
  • The total sum assured for a combined life insurance policy cannot exceed the primary insured’s maximum sum assured if one spouse is unemployed.

Joint term insurance plans’ advantages –

The advantages of having joint-term life insurance plans can be numerous. Here is a list of some of the many benefits you could get from getting this type of insurance plan:

  • Less costly

Cost effectiveness happens to be one of the most obvious benefits of buying a joint life insurance plan. The combined life policy offers significantly lower premiums as compared to other policies. As a result, you might profit from dual coverage at a fair price.

It is advisable to use an online term insurance calculator to find affordable premium rates, depending on your requirements.

  • Tax benefits:

Deductions for insurance premiums are allowed under Section 80C of the Income Tax Code (Income Tax Act). Furthermore, Section 10 stipulates that the beneficiaries’ death benefits be tax-free (10D). Tax laws are subject to change. It is considered ideal to consult your tax advisor about how you can earn tax exemptions.

  • Income source:

They may benefit from the regular monthly payments made by the insurance to the beneficiary in the event of the insured’s demise because it can give them a reliable source of income and help them plan their budget better. You, the policyholder, may choose between a lump sum and monthly payments as the policy’s distribution method, depending on your family’s needs.

Conclusion –

The current pandemic has made it even more urgent for people to cover unlikely eventualities with a term insurance policy. These customised plans provide financial stability and assistance in the case of unforeseen disasters. These arrangements ensure that the family’s goals and way of life won’t change when the policyholder passes away.

Due to the rising economic and commercial unpredictability level, term plans have grown significantly and have now become a valuable tool for insurance firms and consumers.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

Tax benefit is subject to change in prevalent tax laws.

Also Read:  Tax Planning Tips: How Can I Save Income Tax?