Confused about buying the best life insurance? Not to worry, you are not alone. Taking up a life insurance policy is one of the most important financial decisions for your life. However, with so many players in the market selling different policies, choosing the right one can turn out to be quite a predicament. Different types of term insurance policies such as joint life policies were created in order avoid the hassle of buying separate policies for a couple. In order to help you make the right decision, we have listed out the benefits and drawbacks of both joint as well as individual life insurance policies:-
Joint Life Insurance
- Under a joint life insurance, a couple can be covered under the same policy. A joint life policy has two types.
- Under the first type, the payout will be received on the death of either one of the joint policyholders, whichever occurs first. After the death of one partner, the policy benefits will cease.
- Under the second type of joint life insurance, the insurance cover will continue until both of the partners die. Hence the insurance company will provide separate payouts for both of the spouses.
- On the death of the first policyholder, the policy premium will reduce.
- Joint life insurance is cheaper than two separate individual life insurance policies.
- If both the partners die at the same time, there will only be a onetime payout.
- Some joint life insurance policies also offer the benefit of premium waiver i.e. if one of the partner dies the surviving partner need not pay any premium for the rest of the policy term.
- Divorce and separation may turn problematic in case of joint life insurance. A joint life insurance cannot be separated even if the partners get divorced. Hence it will continue to exist as a joint policy until one of the partners die.
- There is not much flexibility in term of coverage for both the partners. Most of the companies allow only 50% coverage for each spouse and 25% if a partner is a homemaker.
Individual Life Insurance
- If a couple takes up an individual life insurance policy, there will be two insurance payouts.
- Even if both partners die at the same time, the dependents will get more coverage as there will be two payouts.
- Taking up two individual life insurance policies will be more expensive than a joint insurance policy.
- Each policy can be chosen for different terms and different amounts. Hence individual policies offer more flexibility.
- Paying two separate premiums at different times can be annoying.
- If the individual policyholders decide to separate, their life insurance policies will not be affected.