Tuesday, November 8, 2016

Joint or Individual Life Insurance Policy - which one is better?

Joint or Individual  Life Insurance Policy - which one is better?


Life is so valuable that we can't put a price on it. Life Insurance is very much important for each and every person. In Insurance, an approximation of the value of life is insured on various factors. In a policy, the life of the individual or any of individual's near one's life gets benefited in a case of any of  death or health issue.


Generally, Life Insurance Policies are designed for an individual based on various criteria's like age, income, health, pre-existing illness and lifestyle. Moreover, there are joint policies too, which covers the whole family or a couple together. In these joint policies, both members get the equal benefit, by which if anything happens to one individual the other remains Financially stable. In some joint policies, one can cover child instead of the spouse.


Type of Joint Life Insurance Policies


Mainly there are two types of joint life  insurance policies.

'First Death': In this policy, the policy will cover the sum of the death of the first individual, the rest will cease to continue.

'Death of Each Life': In this policy, plans pay on the death of the first individual, later on, the cover will continue with reduced premium.

Currently, Bajaj Allianz iSecure Plan, HDFC term Assurance Plan , LIC Jeevan Sathi Plus and various other term insurance plans are available in the market.



Before picking up any of the plans you should keep in mind the following features.

  • Cost Pricing
  • Terms and Conditions
  • Tax Benefits
  • Ease of Use
  • Flexibility
  • Pay-out
  • Benefits and Maturity
  • Divorce and Separation
  • Riders
  • Premium Waiver Benefit 


Cost Pricing


The opening plans or premium plans for a joint life insurance are cheaper than plans for a particular individual. There is no much different in cost of policies. Also, Premium Policies for a joint Insurance are expensive than separate individual policy plans.


Terms and Conditions


In Individual Life Insurance Policies, User can select plans by selecting proper terms and conditions and it may differ for the other spouse. While in Joint Policies, Terms and Conditions are same for both.


Tax Benefits


Here both Individuals and Joint Policies will get advantage under the section 80c of Income Tax Act. However, in few policies, the payout that a child or  Spouse received after death is tax-free under section 10 of Income Tax Act.


Ease of Use


Individual Plans, in this Individual, has to pay for the plan based on the selection of policy and it's Provider. While in Joint Insurance Policy, one time Premium amount is to be paid.


Flexibility


Flexibility differs in both the plans. In Individual Policy, there is no Limit on the amount, while there are some rules in Joint Policies. In Joint Policies, it allows to cover 50 % only and it is reduced to 25% if the spouse is a homemaker.


Pay-out


In Individual Policies, they pay-out after the death of the insured. Also, plans differ for both the Policies. In 'First Death' Policy, which allows claiming Insurance on the death of any individual. While in 'Death of Each Plan' Insurer will make the payout on each of the Individual.

Premium Wavier Benefit


This is only available for Joint Insurance Policies. In this, after the death of any individual, other spouse doesn't need to pay Premium amount. Also, the Spouse get income every month or year based on the chosen policy.


Divorce or Separation


Divorce doesn't affect any individual Policy. While, if the Policy is Joint, then it is troublesome. By this, Policy can't be divided or stopped among individuals. If both the individuals don't pay then it will be ceased, but if any spouse decline to pay, then another person has the burden to pay money off both. Also, they are some Policies which don't allow to continue after Divorce, it is based on Insurer.

Riders


This Plan is for riders which cover disability, accident or critical illness. In this Plan , the rider has to pay a certain amount based on the treatment. This Plan differs for Individual and Joint Life insurance Plans. One should review each plan and select appropriately.

Benefits of Plan Maturity


Life Insurance Plans Differ for both Individual and Joint Life Insurance Policies. Some Provide Payout after the death of one individual, while sum provides benefits after reaching a certain age in the life. The Benefits of the Policies are based on the selection of Policy.

One should also consider terms like additional benefits, sum insured, policy term gross payout, surrender values, the premium amount of plan and claim settlement values before selecting Policy.

Both Joint and Individual Policies have their Prons and Cons, one should deeply look at them before selecting.

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