Importance of Term Insurance for a Married Couple
Term plans are a way to cope during a vital contingency, especially in cases of severe illness, diseases, and emergencies. Term plans help cover the financial risk associated with any unforeseen circumstances.
Gone are the days when life insurance policy was only considered to be an investment... Today, with the advancement in financial awareness, term plans have become part of much better security for a specified period.
Let's take a look at the various aspects of term insurance and how it is beneficial for married couples.
Term Insurance For Married Couples
Some plans are an ideal option for couples, especially for those who are getting newly married. They have long-term protection with low premiums for a fixed period say about 10 years, 20 years.
Term insurance plans are yearly renewable and hence premium needs to be paid for a year only.
Now, there are multiple types of Term Insurance Plans available in India. The most common one is Pure Term Plan. In this type of term plan, if the insured dies within the policy tenure, then the sum assured would be payable to the nominee. However, nothing is payable thereafter, i.e. if the policyholder does not die within the policy tenure, then the policy still continues, without any payment made to anyone.
However, for married couples, you can either opt for separate term insurance plans or opt for a Joint Life Term Insurance Plan wherein if either of the couples dies within the policy tenure, then the entire sum assured would be paid to the other one, but the policy continues.
Why Increase The Coverage After Marriage?
The truth is, given life’s uncertainties, it is best to save yourself from the one uncertainty that comes without knocking the financial risk. The reasons to increase term plan coverage after marriage include:
1. Debt Obligations
Given that you are changing your status from single to married, your relationship with your finances also increases. To help you save some for your car, house, and your child’s education it's best to be safe than to be sorry.
2. Lifestyle Protection
Illnesses do not come with invitation cards. If a spouse is diagnosed with a permanent disability or a long-term illness leading to the total incapacity of income, family finances will fall on one spouse. Term plans will help you remove the additional burden, or precisely cope up with the unforeseen challenges.
3. Cheaper Than Life Insurance
As the financial risk of the market fluctuates overnight, the cost of insurance increases with age. Although the mortality rate in young adults is lower compared to older people, it does not negate the risk of young people acquiring illnesses, meeting unforeseen circumstances, or getting diagnosed with lifestyle diseases.
Joint Term Insurance or Two Separate Term Plans?
Term insurance should be considered after taking into account family requirements and the pros and cons of marriage. Well, what if the couple gets divorced, or, both people die together in an accident? What will happen if the surviving partner dies while continuing the monthly payout period? Also, most insurers do not offer joint life term insurance plans or may not provide the best plan at the most affordable rates.
Hence, in that case, two separate term plans may be the best choice. But let's understand one thing, term plans are a requirement these days, but should not be hurriedly decided upon.
There is no mandatory rule of buying either a joint Term plan or two separate plants. The choice may depend on family to family.
Consider The Following Factors While Choosing A Joint Life Term Plan in India
- The people that need to be covered under the plan and the nominee
- The exit strategy, in an unforeseen situation, if both of them happen to die or separate or get divorced
- Suitability of the term plan (precisely joint term plans are best suited for middle-aged couples unlike two separate plans for each policyholder in a marriage)
- The freedom to choose the sum assured
- Best suited for workers or non-workers
- The total premium vis-a-vis the coverage and the enhanced benefits
- Presence of a child, the benefits offered to the child, the appointee if the child is a minor
Based on the above, it will be easy to calculate the risk, the sum assured, and take an informed decision.
Pros And Cons Of Joint Life Term Plan
Pros of a Joint Life Term Insurance Plan:
- Option to waive the premium:
This is one of the most important benefits offered in joint life term plans wherein the future premiums get waived off in case either of the two insured dies within the policy tenure but the policy continues. However, it varies from plan to plan and may not be available with all plans.
- Lump-sum death benefit:
In case of death of either of the persons covered in the same joint term life plan, while the plan continues. This compensates for the immediate expenses.
- Tax Benefit:
The premium paid towards a joint life term insurance plan is eligible for a tax deduction under section 80C of the Income Tax Act 1961 upto INR 1,50,000 per financial year.
Usually, a joint life term insurance plan is cheaper than two individual ones.
Cons of a Joint Life Term Insurance Plan:
- Lesser choice:
Usually, joint life plans do not offer a wide range of choice. Hence most joint term life insurance plans offer a lower cover than an individual term plan.
- Lesser flexibility:
Joint Term Life Insurance Plans do not have a wide range of additional benefits and riders as regular individual term insurance plans.
Although joint term life insurance plans might make sense to many, you might weigh the pros and cons of the same before opting the same.
Difference Between Two Separate Plans And A Joint Term Plan
With joint term plans, both spouses are covered under a single plan. Therefore, it is easy to track. On the contrary, two separate plans allow each spouse the liberty to cater to several factors like suitability, personal requirements, employment, and expenses, etc.
In PNB MetLife - Mera Term Plan, a Joint Life Term Insurance Plan, the maximum coverage offered for the spouse is INR 25 lakhs. However, if the primary insured dies, the life coverage for the spouse continues and all future premiums are waived off! This is surely a benefit.
The above information can also be considered for a married couple without kids. You are wondering how and why should the term plans change for those who have children right? Read on!
Term Plans For Married Couple With Children
A term plan is a tricky option, however, for couples with children, it is best to opt for a joint term life insurance plan. Joint term plans have their benefits. They allow benefits under:
- Critical illnesses
- Accidental death
Despite the variations and conditions of the policy, a joint term plan is advantageous because:
- It offers the option of a double payout.
- In case of a double payout, the death of one spouse leads to a lump-sum payment of death benefit to the other
- The option of waving the premium with continued live coverage for the surviving spouse.
- Joint term plans are eligible for tax deductions under section 80C, 80D and 10 (10D) of the Income Tax Act.
Joint Life Term Insurance Plan Options in India in 2020
In case you wish to consider Joint Life Term insurance plans with your spouse, then you may consider the following options.
Name of Plan
|1||PNB MetLife Mera Term Plan||Maximum age 99 years||There is an option called “Cover for Spouse” which can be availed|
|2||Edelweiss Tokio Zindagi Plus Plan||18- 60 years||There is an option called “Better Half Benefit” where the coverage for the spouse can be availed|
|3||Aditya Birla Life Shield Plan||18 – 65 years||Offers “Joint Life Protection” to include the life of the spouse under the same plan|
Life of 5 popular individual life insurance plans in India 2020
In case you wish to opt for separate individual term insurance plans, both for yourself and your spouse, then you can consider the following options:
Name of Plan
|1.||Aegon Life iTerm Plan||18 – 65 years|
|2.||Bajaj Allianz eTouch Lumpsum||18 – 65 years|
|3.||SBI Life eShield||18 – 60/65 years|
|4.||LIC Tech term||18 – 65 years|
Joint Life Plans are usually easier to service and manage as it is a single point of premium and claim document as compared to two individual term insurance plans. However, the choice is limited and so are the coverage benefits available in India. However, the choice is finally yours and hence take an informed decision after weighing all the pros and cons.