Pros & cons of joint life term insurance plan

The joint term insurance plan offers the facility of protecting you and your spouse with a single life insurance policy. The policy can be bought by working couples or by couples where one spouse is a homemaker. Life insurance companies offering joint life term insurance plans include Aditya Birla Sun Life, Bajaj Allianz, PNB Metlife, among many others.

This term plan is designed to cover homemakers who are not able to get a term insurance plan cover for their lives. This plan offers such a cover to both husband and wife through a single policy.

A primary policyholder who is an earning member of the family can buy this policy. The sum assured in this policy for the spouse (secondary policyholder) is usually equivalent to 50% of the primary policyholder’s policy sum assured, but some insurance companies place a cap on the maximum cover that can be extended to the spouse of the primary policyholder.

If the primary policyholder dies, the joint term insurance plan continues to extend life cover for the spouse for the remainder of the policy term and also waive off all the future premiums for the surviving spouse. The joint term plan works out to be more cost-effective than buying separate term plans for each spouse.

However, there are some disadvantages of this policy. First is that individual term plans offer higher cover than joint term plans. Also, if one of the policyholders dies, other policy remains in force, whereas some of the joint life term insurance plans do not offer such coverage. Moreover, in the case of separate term plans, both policyholders can choose various add-on covers as per their needs, which is not possible in the case of joint term plans. That apart, if both the policyholders die at the same time, say, in an accident, only a single death payment is made to the heirs of the deceased. Also, if the couple gets divorced and live separately, then the policy becomes void as the benefits are not available separately.