Joint term insurance for couples: Is it an alternative to separate ones?
Term insurance is a plan that promises to financially secure your dependants if anything was to happen to you. With rising costs, today most of the families fall under double income homes wherein the husband and wife are both in a job and earn money to support the family financially. Thus, was felt the need of joint term insurance plans. With both members earning and contributing if something unfortunate was to happen to any one of them, the household is destabilized. Let’s delve deeper and compare which option is better for such a family with both the members earning - one joint term insurance for the couple or two individual plans one for each member.
Seamless Functioning
Joint term plans are of two types – first claim basis and plans that pay sum assured on death of each. Now, if you go for the latter one which makes more sense because it is a joint term plan, then it works seamlessly. You won’t be required to assess your needs if something was to happen to one member or look for another plan or another way to protect the family income earned by the living member. The benefits of joint term plan is optimized because in the case of death of one partner you will get one chunk of sum assured and then if the death of another partner occurs within the timeline of the plan then the sum assured payout is made again.
No Discount on Premium
Buying two is better than one! Not in the case of Joint term insurance plans. While from the utility standpoint, the product is well crafted, the same is not the case from value proposition perspective. To give you an example, joint life cover offered by Aegon Life Insurance for working spouses is twice more expensive than the couple taking individual covers. If you compare two standalone term plans and a joint term plan you will find a huge difference on premium for the same amount of sum assured. Now, that’s a dampener for joint term plans? Why pay unnecessary when you can get two separate plans rather than buying one. Joint term plans fail here.
Fewer Options on Offer
As this is a highly customized offering in term plan, currently there are only a few companies offering joint plans. This can be considered as a drawback. Now, this product is exclusively build for working couples, however it’s not yet highly evolved to offer great value to consumers. There are currently only couple of insurance providers that offer joint term plans, which includes PNB Metlife, Bajaj Allianz and Aegon Life Insurance. There also there is a cap on the sum assured that these plans offer. There are more companies who are working to launch a more evolved version of this product soon.
The Final Word
If you are a working couple then you can consider joint term plan for the benefits it offer, however it’s not an ideal product right now because the value proposition is low and it’s expensive. Make sure that you buy standalone pure term plans to obtain maximum benefit in terms of security and savings.
By Yashish Dahiya, Co-founder & CEO, PolicyBazaar
