Single or Joint Life Insurance Policy?
Life insurance can be purchased to cover just yourself or you and your spouse as joint in the event of either of you passing away.A regular question when couples take out life insurance is whether the insurance should be taken out on a single or joint life basis? When arranging life insurance, it’s important to know and understand the difference between a joint and single life insurance policy.
Also Read: How many life insurance policies should you have?
A ‘single’ life insurance policy covers one person only, and pays out the sum assured if that person dies during the policy term.
A ‘joint’ life insurance policy cover two lives, usually on a ‘either first death’ basis, meaning the sum assured is paid out if the either first person dies, during the policy term and then the plan would end.
Joint policy versus two separate policies
Whether you are better off with a joint policy rather than two separate policies depends almost entirely on what you need to cover and you are in a relationship and looking for the best value option for you and your spouse – and one offering the most benefits. With a joint policy, you and your spouse are covered by the same policy on a single basis; take out two single policies, and these will be completely separate life plans. Generally speaking, a joint policy will be cheaper than single policies, but issues can arise from holding a policy with someone else, as there will only be one payout.
For example, if you were to take a joint policy for this purpose, again, you are insuring you and your spouse on a either of first death basis, so let’s say you are insured for Rs 20 lakh, if one of you dies before the other the policy would pay out Rs 20 lakh to your spouse. If you both died at exactly the same time the policy would still pay out Rs 20 lakh to your family.
The issue with this is if one of you dies before the other, the remaining person will be uninsured and have to take out another policy to cover their family. As Life Insurance is cheaper the younger you are, if you then need to come back and take out another policy further down the line, you will inevitably pay more for the new policy. By contrast, with two separate policies you get double the cover; you can also be insured for different amounts. With a joint policy, there are also problems if a relationship breaks down, as splitting a policy can be difficult.
By purchasing two separate life insurance policies you may also save yourself money in the long run. If the worst happens to one of you, your spouse will still be insured paying the same premium they always have been and do not have to worry about taking out another more expensive life insurance policy when they’re older.
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Suresh K Narula is founder and Principal Financial Planner at Prudent Financial Planners. He has earned the professional CERITIFIED FINANCIAL PLANNER and got registered with SEBI as Investment Advisor. He writes on personal and financial planning
articles and got published in Dainik Bhaskar, Business Bhaskar and The Financial Planner's Guild, India. He is also a member of Financial Planner's Guild India ( An association of practicing SEBI registered Investment advisers) to create awareness about Financial Planning in general public, promote professional excellence and ensure high quality practice standards. Suresh received his an M.com from Himachal Pardesh University and an MFC from Punjab University, Chandigarh. He can be reached at firstname.lastname@example.org