Term insurance is the most basic form of life insurance and offers comprehensive risk cover over a fixed period of time. If the insured dies within the term of the plan, the insurer pays out the sum assured to the nominee or beneficiary of the term life policy. Term insurance is pure risk protection. There are no survival benefits.
Term policies do not have high penetration in the Indian market. With the modern World being full of uncertainty, people are slowly realizing the importance of term life policies. Availing a term policy is very important for the breadwinner of the family. If you have dependents, avail term life insurance plans.
Term policies are gaining popularity as people seek financial security for loved ones. They offer high cover at low premiums. But the catch is, these plans are pure life insurance products, they do not offer survival or maturity benefits. Avail life insurance for risk protection. Not for savings cum insurance or investment cum insurance.
Term plans are the most economical option available in the market to secure a family’s future. If you are a 26 year old salaried individual with a CTC of Rs 5 Lakh a year, then you can avail a term life policy which offers cover, 20 times yearly income. This is a cover of Rs 1 Crore. The premium would be around Rs 8,000 to Rs 10,000 a year for the term life insurance plan.
Under term insurance plans, the beneficiary or the nominee would receive a lump sum or periodic payouts of the sum assured, if the insured dies within the term of the policy. Earning husband and wife (Twin earners) can consider the option of availing a joint term life policy which covers both against risk. They may also avail two separate term life plans.
Before you learn the advantages and disadvantages of joint term insurance, it is a must to know what exactly joint term insurance is.
Under joint term insurance policies, the sum assured is paid out on the first claim basis. The sum assured is paid out when any of the two policyholders die and the policy seizes to exist. The sum assured is paid out to the surviving partner. If both the insured persons die together, then the sum assured under the joint term policy is paid out to the children.
Moreover, the annual premium paid towards joint term life policies is eligible for tax deductions under Section 80C of the Income Tax Act, 1961. Proceeds of the term policies are completely exempt from taxation.
SEE ALSO: Best Term Insurance Plans In India
Joint term life policies offer coverage for couples and have almost the same terms and conditions as that of an individual term insurance policy. It is easy to keep track of the plan as both husband and wife are covered under the same plan. In separate term plans, the couple has the liberty to select premiums and terms/conditions as per their needs.
Apart from this, if the insured has availed a joint term life plan, then only one death benefit is paid out, even in the case of accidental death of both the insured persons.
But with separate term plans, the nominee is eligible to receive two separate payouts on both the term life plans. If the couple heads for a separation or divorce, then the joint policy is converted into a single term insurance policy. If one of the partners refuses to pay or doesn’t pay on time, then the tenure of the policy lapses unless the other partner bears the burden of paying the policy premium.
Few joint policies offer add-on benefits. Few plans have a rider, in which if one of the partners die, then regular payouts for a fixed period are made to the surviving partner. These regular payouts are in addition to the death benefits paid out to the surviving partner. Few polices also offer accidental death benefit rider. Under this rider, if the insured person’s death is due to an accident, then it pays out an additional sum assured along with the original sum assured under the plan.
Availing a joint term policy has its own advantages and disadvantages; there are certain parameters that must be considered when you are planning to buy a term life policy.
Before availing a policy, compare the annual premiums payable for both joint and separate term plans. Usually, joint term plans are more affordable when compared to two separate plans. Hence, if you want cheaper premiums, then you must go with a joint term plan. However, for your requirements and affordability, go online and compare different term insurance policies and choose the most beneficial plan.
Evaluate benefits and the extent of coverage offered on joint insurance and separate term insurance plans. Before availing a term life plan, check for riders as well as terms and conditions of the plan. If you are availing a joint term policy, then ensure that the policy allows you split the joint insurance plan in the future.
SEE ALSO: What is a Term Insurance Plan?
Joint term plans are the most beneficial for those wanting a combined financial plan. It is economical and offers a financial shield for the lives of your loved ones against all kinds of uncertain events.
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