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Joint Life Policy: A Complete Guide

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23-06-2022 |

Conventionally, life insurance plans were available for a single policyholder. However, life insurance in India keeps bringing in newer and better products and services to match the changing needs of the consumers. More and more people are looking for combined coverage for two or more members of the family under a single life cover policy for easy-to-manage and comprehensive coverage. One of the recent life insurance products that satisfy this requirement is the joint life insurance plan.

So, what are joint life policies? Are they better than buying two separate policies? Let us find out!

 

What is a Joint Life Insurance Policy?

A joint life insurance plan covers two people under a single policy. It is ideally promoted for married couples. When you get married, you create a combined financial plan and life insurance is one of the crucial elements of that plan. Traditionally, couples bought two separate policies. But with the advent of joint life policies, couples can opt for a single plan. This eliminates the need to maintain two separate policies and pay two different premiums.

Not just married couples, any two members of the family can get a joint life insurance policy - a parent and a child, siblings, etc.

 

How does a Joint Life Insurance Plan Work?

To make the most of a joint life policy, it is important to understand how it functions. It will help you decide whether you need separate individual policies or one joint life insurance policy.

Similar to an individual life insurance policy, joint life policy requires you to pay regular premiums to keep the policy active. However, you pay premiums for a single policy and get coverage for two people.

If one of the insured members passes away, the surviving member is entitled to receive a pre-determined sum assured and the policy continues with the surviving member as the life assured for the remainder of the policy tenure. The majority of the joint life insurance plans cover the second member or the surviving member with a different sum assured than the primary policyholder.

The payout to the surviving partner will depend upon the payout mode selected at the time of the policy purchase - lump sum or monthly payouts for a specific number of months or a combination of lump sum and monthly payouts.

Some joint life insurance plans waive off the future premium payments in case the primary policyholder dies. The policy will continue to cover the second partner with no premium payment.

If both the policyholders die at the same time due to unfortunate circumstances, the base sum assured will be paid to the nominee/legal heir.

Let us understand this with an example:

Akash bought a joint life insurance policy for himself and his wife, Bhoomi for a tenure of 30 years. After 15 years, Akash passed away due to a prolonged illness. Bhoomi received the specified sum assured as a death benefit.

Post that, the policy continued (15 years tenure pending) with Bhoomi as the life assured. However, the coverage changed as per their policy terms. As their policy had the ‘waiver of premiums’ clause, Bhoomi did not have to pay a single rupee to continue the coverage.

After 10 more years, Bhoomi passed away. She had appointed her daughter as the nominee who received the specified sum assured for the second life assured as the death benefit.

If both Akash and Bhoomi had passed away at the same time, the base sum assured would have been paid to their daughter.



What happens if the policy you bought has a savings/endowment component attached to it? How are the maturity benefits paid out?

In the case of a joint life insurance guaranteed1 returns plan, both the members are covered under the policy. If both partners survive the policy tenure, the accumulated corpus will be paid out either as a lump sum or as regular payouts in the approved bank account.

In case of the death of one partner, the surviving partner receives the base sum assured as the death benefit and the policy continues with the accumulated corpus. Upon maturity, the accumulated corpus will be paid to the surviving partner as a lump sum amount or regular payouts.

If the surviving partner also dies before the policy maturity, then the applicable sum assured plus the accumulated corpus will be paid to the appointed nominee as a death benefit.



Advantages of Joint Life Policies


Image Of Joint Life Insurance Plan

  • Money-Saving: Buying a joint life insurance plan is convenient than getting two separate life covers. Thus, you can get coverage for two members at an affordable premium price.
  • Time-Saving: With a joint life insurance policy, you do all the documentation for the policy purchase just once. You do not have to go through the entire process separately for you and your joint policyholder, thereby saving time.
  • Financial Support in case of Death of Primary Policyholder: With a joint life cover, the surviving partner receives the base sum assured which helps ensure financial stability and security.
  • Tax* Benefits: Joint whole life insurance policies also enjoy tax* benefits similar to individual life insurance plans as per the prevailing tax* norms. The premiums paid for a joint life plan are tax-deductible* under Section 80C of the Income Tax Act of 1961. Moreover, the death benefit paid out to the surviving partner and any maturity benefits are tax-exempt* under Section 10(10D) of the Act.


Who Should Get a Joint Life Insurance Policy?

A joint whole life insurance plan is popular amongst married couples due to the combined benefits and cost-effectiveness that it offers. If one of the spouses dies, the surviving spouse not only receives the death benefits but also gets continued coverage along with exemption from premium payments.

This is especially beneficial if the partner that met their demise was the primary earner of the family. The death benefit helps the surviving partner take care of the family’s financial requirements.

Additionally, the surviving partner is assured that in case of their demise, the family will receive another death benefit payout. With premiums waived off, they don’t have to worry about any added expenses to continue the policy. For example, you can opt for Tata AIA Life Insurance Sampoorna Raksha Supreme(A Non-Linked Non-Participating Individual Life Insurance Plan, UIN: 110N160V02) that will help you increase the sum assured by 50% at the time of your marriage to cover your partner.

You can check out Tata AIA Life Insurance Plans for some individual as well as joint life cover policies. You can choose from:

  • Term life insurance
  • Life insurance savings plans
  • Unit Linked Insurance Plans
  • Retirement Plans

For detailed information about which plans offer joint life cover, you can get in touch with our experts who will help you choose the best life cover for your needs.

 

Conclusion

No matter who buys a joint life insurance plan, it is an excellent way to get combined coverage under a single plan. Make sure you go through the policy document carefully and understand the payout options before proceeding with the purchase.

Every insurer offering life insurance in India has varying guidelines when it comes to the payout of a joint life policy. Get detailed information and clarity on the amount that will be paid out on the first death and on the second one. Duly note and understand the combined benefits offered.

L&C/Advt/2022/Jun/1341

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A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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