Wedding bells around the corner? Or Just married? You must be super thrilled and looking forward to starting a new life together. You dream of buying your own house, a set of luxury 4-wheels, annual vacations and of course world-class education for your kids. You both hold reasonably well-paying jobs and seem to be leading the perfect Indian middle-class life.
Your financial sense tells you to diversify your investments and also include a term insurance plan that can financially safeguard your spouse and your yet-to-be-born kids. When you explore options using a term insurance calculator, you wonder, what if there were a joint term plan?
Marriage and Its Effects on Life Insurance Needs
Savings and investments take time to grow. All plans have to run in parallel though. While you save for retirement and invest in your children’s education, you must also factor in for uncertainties that strike without a warning. You are convinced that a term insurance plan is essential because life is unpredictable. But what are those factors that you must consider when buying a term insurance policy?
i. Cost Saving
Financial prudence is of utmost importance when dealing with money. There are a plethora of options available for every product (including insurance) available in the market. You select the one that matches your needs and is appropriately priced. After all, a penny saved is a penny earned. A joint life policy works out to be much cheaper than buying two individual policies.
ii. Immediate Terminal Illness Cover
Policies come with a host of additional features such as terminal illness, total permanent disability etc. For example, in the iSelect Smart360 Term Plan offered by Canara HSBC Oriental Bank of Commerce Life Insurance, the company pays the future premiums on detection of terminal illness or total permanent disability.
iii. Single Policy to Manage
Your investment portfolio would anyway get crowded with FD Receipts, PPF Accounts, Gold, Real Estate etc. Managing multiple insurance policies will only add to your administrative work. Why not simplify by availing a joint-life policy?
iv. Prepare for Future Together
With ever-changing employment scenarios, redundancy caused due to technological advancements, the emergence of newer illnesses and the rise of nuclear families, you have to plan for all eventualities. People work on multiple gigs, stay home to manage the household or move cities looking for greener pastures.
The Sum Assured on a term insurance policy is calculated basis the Human Life Value (HLV) which is estimated to be around 15 times the person’s annual income. The joint-term plan benefits are tremendous and it is a logical option in case either of you plans to become a stay-at-home parent until your child/ren grow(s) up. The Sum Assured is payable in case of the unfortunate demise of either parent. Conventional policies frown to offer life cover to a non-working person.
v. Protection Against Disability
Riders are like add-on features that cover accidental deaths, disability and offer financial backup for children. These benefits are over and above the Sum Assured offered in the core policy. The disability benefits are designed to help overcome incidental expenses that may not be reimbursed by regular mediclaim policies.
So, what is a term insurance plan with joint life coverage, how does a term plan work and what are the features to look for in your joint life plan?
Five Features To Look for In Your Joint Life Plan
1. Gradually Increasing Sum Assured
Mapping Sum Assured to life stages helps because the premium then increases over time and remains pocket-friendly at all times
2. Return of Premiums
Does the plan return your premiums if you outlive the policy term? Is it not worth the investment if you get the best of both worlds? Life cover for several years and money back when you need it the most.
3. Limited Premium Paying Term
You can pay for a certain period and enjoy life insurance protection for a much longer-term. Is this not value for money plus less stressful because your monthly budget is affected only for a limited period.
4. Discounts for Higher Sum Assured
You may require a large sum assured depending on your income levels and age. Does the policy offer discounts on premiums if you opt for a higher sum assured?
5. Coverage Under Married Women Property (MWP) Act, 1874
This is solid protection for women because the Sum Assured cannot be attached for repaying loans availed by the husband during his lifetime. MWP act ensures that the Sum Assured safely reaches the wife or children.
Marriage is an important event in life and another reason to relook at your investment plans and risk mitigation strategies. Your decision will have long term implications on the lives and careers of your family members including children.