A joint term covers two individuals or a couple under one policy. This is a smart and sensible choice for a plethora of reasons. Here’s a look:
- In the event of one’s death, the other one will receive the coverage amount.
- A viable option during a contingency to cover the financial risks involved in major unforeseen events.
- Hike in medical inflation emphasises considering sound joint term insurance where two lives are covered.
You will receive long-term protection at the start of this life’s journey with low premiums. The protection is usually offered for a fixed period, say, 10 years from the purchase date. It acts as a safe fall-back option and is no longer a choice but a necessity. Look at a few good reasons to consider joint term insurance if you are ‘just married’.
It acts as an ‘additional cover’ when a sudden illness crops up. This may lead to losing jobs or eating up the savings over time. A term plan can help your stay-at-home spouse take care of themselves while you are not able to generate income. Your investments or emergency funds may be used to pay the medical bills while the insurance can be used to cater to daily expenses like utility bills and debts unless your employment is restored.
The combined premium of a joint term life insurance is lower than that of an individual policy. It is also quite cost-effective to consider a joint policy, say worth ₹5 lakhs, instead of more than one policy of the same amount each. It also makes it easy for the surviving partner to manage the insurance rather than tracking multiple ones in times of emotional distress.
A newlywed couple might purchase a house. Both may plan to pay the EMIs together. In the untimely demise of one, the entire burden will fall on the other. This is when joint term insurance can be useful to help them cater to this major financial requirement. It also makes sense to opt for a joint plan to repay all debts and liabilities that you may have originally decided to pay with your spouse. For instance, home furnishing or a new vehicle EMIs can be cleared with the policy without a cash crunch.
Any premium under joint term insurance is eligible for tax rebate under Section 80C of the Income Tax Act 1961. This means a discount of up to ₹1,50,000. The amount received upon the premature death of the spouse also qualifies for exemption under Section 10 (10D) of the Act. This way the total tax liability is cut down to a great extent.
Weigh the pros and cons of the joint plan to suit your needs. Check the coverage you will require depending on both your current medical conditions and bank balance. Know the limit on the claimable amount as well. You may also talk to an expert to make sure this product is ideal for your situation.