The popularity of term insurance plans is increasing day-by-day in India, especially after the ill-effects of the COVID-19 pandemic. A term plan offers a substantial sum assured at a pocket-friendly premium provided you buy it early on in life. If you wish to know more about what is term insurance, read on.
A term insurance plan is an income replacement tool that can help your family to take care of their expenses and financial aspirations in your absence. Gone are the days when men were the sole breadwinners of the family. Today, even women have climbed the corporate ladder and are playing a crucial role in running their houses. The primary purpose of investing in a term insurance policy is to provide much-needed financial security to the family if the policyholder passes away untimely. In the present family structure where both husband and wife contribute towards the household income, it has become necessary for them to invest in a joint term insurance policy.
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What is a joint term plan?
A joint term plan provides life cover for husband and wife under a single term plan. Here, both of them will have to pay the premium for the policy. If any one of them dies within the policy tenure, the surviving spouse will receive the death benefit. If both spouses are no more, the legal heir or policy’s nominee gets the death benefit.
Is joint term insurance cost-effective?
Joint term insurance provides the benefits of two policies under a single plan. If you are on a tight budget and are uncomfortable spending on two different policies, it is advisable to purchase a joint term plan. Here, the term insurance premium will be significantly cheaper than paying for two separate policies.
Is it necessary to buy a joint term plan only with your spouse?
No, it is not mandatory to buy a joint plan with your spouse; you can even purchase it along with your child. In case an adverse circumstance results in your absence, your child’s economic future is safeguarded with the death benefit received by him or her. As a term plan provides a large sum assured, it can cover the rising cost of education.
Advantages of investing in a joint term insurance plan
Besides cost-savings, here are a few other pros of investing in a joint term policy:
Tax exemptions
A joint term plan helps you shield your family’s monetary well-being. Moreover, it lets you save on taxes. Here, you can seek a deduction according to Section 80C of the Income Tax Act, 1961 on the premium that you pay for the term policy. You can claim a maximum permissible deduction of INR 1.5 lakh per year. Additionally, the death benefits that the surviving spouse and nominee receive are tax-free as per Section 10 (10D) of the Act.
Substitution of income
Some joint term insurance plans provide a fixed amount every month over and above the sum assured if the policyholder dies during the policy period. The purpose of such plans is to act as an income replacement tool for the deceased policyholder’s spouse.
To sum it up
Investing in a joint term insurance policy is one of the best ways to provide financial protection to your family against the uncertainties of your life. Such a plan offers death benefits twice. It can prove handy for your spouse during your absence. Also, if something untoward happens to your spouse, your children can get the death benefit. If you are married and are looking to buy a term plan, investing in a joint term policy will be a smart decision.