Life Insurance Joint Policy: Key things to know
Everyone who wants to ensure the financial security of their loved ones must have life insurance. Most of the time, life insurance policies are constructed such that the family's main provider of income is protected in the event of an untimely death. In this case, the spouse gets the amount of insurance for her future upkeep. In today's society, it is fairly typical to see families where both partners work. Life insurance is therefore necessary for both of them. Due to this need, a lot of businesses have begun to provide joint life insurance policies, allowing couples to cover two lives under a single policy. Let's look at the fundamentals of joint life insurance before talking about the best coverage for your needs.
Description of Joint Life Insurance policy
A joint life insurance policy is defined as a type of term insurance for spouses that provides supplementary coverage to the principal life insured's spouse. Regardless of employment position, the spouse is covered under this policy. The following is a list of some salient characteristics of a joint life insurance policy:
- The majority of joint life insurance policies on the market cover the spouse of the primary life insured for up to 50% of the sum assured.
- After either of the two spouses passes away, the policy continues to be in effect. The surviving spouse will receive the sum insured amount in accordance with the provisions of the policy
- The compensation amount will be given to the nominees listed in the policy document or the legal heir if both spouses pass away suddenly within the policy term.
- The combined sum assured amount chosen for a joint life insurance policy cannot be greater than the maximum sum assured amount allowed for the primary insured if the spouse is not a wage earner.
- After the primary life insured dies, some policies provide a benefit that waives the premium.
- Some policies additionally include clauses that, in the event of the primary insured's passing, will pay the surviving spouse a certain monthly sum.
How does a joint life insurance policy work?
The major purpose of joint life insurance policies is to cover non-working spouses who take care of the family. It seems logical to choose two different term insurance policies if the spouse is employed as well. A combined life insurance policy offers protection in the event that one spouse passes away. The surviving spouse can use the funds to protect his or her family's financial stability. In order to offer coverage for the spouse, an additional premium may be required. Most of the time, insurance companies cap the spouse's available sum assured amount.
Think about a scenario where a couple decides to purchase joint life insurance. The family's breadwinner, the husband, chooses a sum insured of Rs. 15 lakh. In this situation, the wife who stays at home is entitled to a 7.5 lakh rupees payment assured. The woman will receive Rs. 15 lakhs from the insurer if the husband passes away within the policy's term. The husband will receive Rs. 7.5 lakhs from the insurer if the wife passes away while the policy is in effect. In the case of single payout plans, the insurance will expire after either spouse's death benefit has been paid. If both people pass away at the same time, the candidate will be given the benefit that is available for each person.
Points of Difference between Joint Life Insurance and separate life covers
|Joint life insurance plans||Separate life insurance covers|
|Insurance coverage for both the insurers , under one policy||Separate insurance coverage is given under one policy|
|Same terms and conditions are offered for both spouses||Spouses can choose policies based on their individual requirements|
|If one of the spouses die during the policy term, the compensation will be provided to the surviving spouse||If the policyholder dies during the policy, the death benefit will be provided to the nominee as mentioned in the policy.|
|If both spouses die simultaneously, the nominee will get a single payout of the combined sum assured amount.||If both spouses die, the nominee will receive double payment from the separate life insurance covers.|
|In the case of divorce, this policy will get affected as there are no provisions on how to split the premiums and benefits||In the case of divorce, these policies will not be affected as they are held separately.|
|The availability of riders are limited as very few insurers provide these add-ons for joint life insurance.||Policyholders can choose rider covers as per their individual requirements and affordability.|
Both joint and separate life insurance policies have advantages over the other. Since non-working spouses may not be eligible for life insurance coverage on their own, joint life covers are quite helpful when providing coverage for them. If this is not the case, using individual covers is preferable because they are nearly equally expensive. Additionally, the advantages of combined life insurance may differ from one insurer to another. You should compare a combined life insurance policy to individual life insurance policies and assess the advantages and disadvantages before choosing one. For more information on how joint life insurance can be beneficial for your particular requirements, you can also speak with a financial advisor.
Who is eligible for combined life insurance?
There are no limitations on who can acquire the policy. However, married couples might find joint life health insurance appropriate. Any of the two persons can buy a combined term insurance policy to safeguard their futures. For instance, a parent and a young kid might choose the combined life insurance coverage.
How do you handle combined life insurance premiums?
They consider any amount in the Joint Life Policy account that exceeds the surrender value to be a loss and move it to the Profits and Losses A/c. As a result, they consider any receipt from the insurance provider and the deposit amount to be a gain.
What is the surrender value in a joint life insurance policy?
Surrender value is the sum a policyholder receives from a life insurer if they decide to cancel a policy before maturity.
Why did joint life insurance come into being?
Under a single plan, the Joint Life Insurance Plan covers two people (the wife and the husband). If one of the people dies, this combination term insurance plan will guarantee the family's financial stability.
Can a combined life insurance policy be divided?
Combined life insurance policies cannot be divided unless you have a "separation benefit." In this case, you will either need to cancel the mutual insurance or choose to have one of you take over the coverage as a single policy.
Who is the beneficiary of a combined life insurance policy?
The beneficiary is usually the second policyholder. In this sense, the first death is similar to a single life insurance policy in that the benefit is issued if either of the two persons dies, rather than just one.
How does a joint life insurance policy work?
The 'joint' policy of life insurance protects two lives, which may seem apparent, but it is crucial to remember that the protection is often provided on a 'first death' approach. This implies that if the first individual dies during the policy's term, the selected amount of coverage is paid out, and the policy is terminated.
If there is no beneficiary, who receives life insurance?
If you do not name a beneficiary, the profits of your life insurance become part of the estate. The proceeds of your life insurance are dispersed following the rest of your possessions. Your property may have to undergo probate, which can cost a lot of money and require a long time to reach your heirs.