Joint Life Insurance Policy: A life insurance policy is a policy that assures the policyholder a promised sum of money from the insurer on the death of the insured person.
Life insurance is a legal contract made between a policyholder and their assurer or insurer, where there is an agreement on a fixed sum of money (also known as lump sum) that the insured person receives due to fatal injury, terminal injury or upon their death.
In modern times, families often have mixed opinions about life insurance policies. Life Insurance policies are essential, especially when one has financially dependent loved ones in their family. If they are insured, upon their death, a fixed beneficiary amount will be paid to them from the insurer as a coverage fund so that the financial burden of the family is bearable.
Due to this reason, many married couples who want to start this scheme are opting for single insurance policies, where both pupils are insured. According to the policyholders, joint insurance policies can be taken on behalf of the whole family (including children).
- Joint vs Individual Life Insurance, which one is better?
- Types of Joint Insurance Policies
- The Advantages of Joint Life Insurance Policy
- The Disadvantages of Joint Life Insurance Policy
Joint vs Individual Life Insurance, which One is Better?
Joint Life Insurance is the name given to the insurance cover got on a first-death basis by the member or members of a family upon the insured person’s death. In join Insurance policies, due to two individuals being involved, one of the insurance holders receives a sum of money on the other holder’s death.
However, individual life insurance is held by only one individual whose benefactor receives the said sum of money after the policy holder’s death. Most life insurance policies are separately created based on the needs and essential factors of the individual.
A joint life policy has the plan for paying only once after the partner’s death. However, individual policies offer more protection since money is provided after the death of both respective holders. Both the procedures have their leads and drawbacks and suit people differently.
Types of Joint Insurance Policies
- First to die insurance policy: First to die joint life insurance is similar to a single-person coverage scheme, where the surviving spouse gets the death benefit of the deceased partner. However, this is a one-time scheme. If the surviving spouse needs a cover, they would have to opt for a new insurance policy due to no further benefits.
- Second to die insurance policy: The second to die policy is called the survivorship policy which, pays out insurance benefits to the surviving beneficiaries but not until both the partners have passed away. Here, the surviving spouse is responsible for paying premiums to continue getting coverage in the future.
The Advantages of Joint Life Insurance Policy
- Childcare: Another great feature of joint life insurance is that sometimes the insured amount does an excellent job covering childcare and education if one of the stakeholders meets their end.
- Lower Premium: Joint Life Insurance policies are advantageous due to the annual amount of their premium being cheaper than two individual policies combined. It is a perfect option for being insured and having space to save money on premiums or business purposes.
- Scope for Replacement of Income: According to current status, both partners usually financially work to run the household, hence If both partners are insured in the policy, the sudden loss of jobs can be dealt with with ease.
- Easy Management: Those opting for join insurances often do them under one cover, which increases manageability and decreases paperwork.
The Disadvantages of Joint Life Insurance Policy
- Delayed Death Benefit: Joint Life Insurance Policies can take years to ensure the beneficiaries after the death of both policyholders, which can be inconvenient if the surviving family has an immediate need for financial support due to the deceased being the earning members of the family.
- Complicated Divorce Proceedings: In occasional cases, divorced partners are burdened with paperwork, and even though the policy can be split, most of the time, it is a highly complex process, and the insured might have to forgo the benefits of the policy.
- Increased Cost: The cost of Permanent Life Premiums can hike up to Fifteen times the amount of term life premiums, making it way more costly than individual term premiums.