Why Should You and Your Spouse Get a Single Term Plan Coverage?

A traditional term insurance policy only covers the life of the policyholder, who purchases the policy. It provides monetary support in the form of a life cover to a single policyholder’s nominees on the occasion of his/her demise. Usually, this policyholder was the male member of the family. However, in recent times, there has been a shift to nuclear families and an increase in gender parity where both partners are working members bringing money to the table. Such a shift in the family unit has brought about the need for life insurance for both partners. This type of life insurance, called single or joint life insurance, covers both spouses in the same policy. Joint life insurance is of various kinds, but the one most likely to be availed by couples is term insurance - the most basic and purest form of life insurance.

How does a single term insurance policy work?

A single term insurance policy covers both partners in the same term life insurance policy. Each gets equal access to the benefits and features under the policy.

Single term insurance ensures the financial security of both spouses and their family. It gives a death benefit in the case of the demise of either of the spouses. Some policies give a death benefit only once, while others pay a death benefit on the demise of each of the spouses. This ensures that the coverage is the same such as in separate term life plans. Depending on the insurer and the term policy in question, the features and benefits vary.

What are the benefits of a single term plan? 

As opposed to separate term plans, a single or joint term plan offers an array of benefits:

1. Two death benefits:

Most term insurance plans in India offer two separate death benefits on the demise of each spouse. As compared to one-time payout plans, single term insurance ensures that double protection is given to the policyholders’ family members as the loss of two parents’ hits harder than one. Some term plans such as the Edelweiss Tokio term plan even gives an additional life cover equal to 50% of the base sum assured to the surviving spouse in case of the demise of the other spouse.

2. Regular income to the surviving spouse:

Some term insurance plans have a feature where they give regular payouts to the surviving spouse on the other's demise. With these regular income payments, the partner remaining behind does not have to shoulder the entire burden of managing expenses alone. Moreover, policyholders can choose beforehand how their partner will receive the payout – either in the way of a lump-sum, lump-sum plus periodic payouts or periodic payouts.

3. An extra death benefit on accidental death:

Just like separate term plans, a single term plan gives the surviving partner an extra death benefit equal to 100% of the base sum assured. This benefit, called the Accidental Death Benefit, is paid in lump-sum and given on an immediate basis to the surviving spouse.

4. Additional riders and benefits:

Some of the best term life insurance plans come with additional riders and benefits that enhance the scope of the coverage provided in a term insurance policy. These include:

• A permanent disability rider: This rider gives an extra monetary benefit equal to 100% of the base sum assured in case the policyholder gets a disability of a permanent nature due to an accident.
• A critical illness rider: This rider gives a lump-sum benefit equal to 100% of the base sum assured in the event the policyholder gets diagnosed with a life-threatening illness such as cancer, heart attack, kidney failure, stroke, etc. It also waives the payment of premiums until the policyholder is fit to start paying them again.
• A daily hospital cash rider: This rider gives extra cash benefits in case the policyholder gets hospitalized for an illness / injury. It covers additional hospital expenses and is given for each day of the policyholder hospitalization.

However, as mentioned earlier, only some of the best term plans offer these extra benefits by paying additional premiums. Insurers such as Edelweiss Tokio Life give their policyholders all the benefits and riders listed above, along with attractive offers and discounts in premiums in their Edelweiss Tokio term plan. They also go the extra mile and provide life coverage against COVID-19, setting a high bar for a life insurance term plan. 

5. Lesser premium rates:

Policyholders can also save on premiums with a single term plan. Sometimes, buying separate term plans can mean paying higher premium amounts. But with a single term plan, a couple can save on premiums and get higher coverage. However, this varies from insurer to insurer, so it is important to compare term plan premium options and features.

6. A one-time underwriting process:  

Buying two individual term plans means going through the medical underwriting and application process of life insurance twice. With a single life insurance term plan, partners get the convenience of getting insurance in one-go, can easily manage their policy, and avoid the hassle of extra documentation, thus saving time and effort. 

To conclude:

Once you know the benefits of joint term plans, the question of how much term insurance is enough remains. There is no fixed answer to this, but a general rule of thumb indicates that one should get life insurance between 8-10 times their annual income. The amount of term insurance will also depend on the personal and financial needs of you and your family, such as life goals, lifestyle or health needs, debts or liabilities, retirement needs, etc. It will also depend on fluctuating factors such as inflation and your earning capacity. Using a term plan calculator to find the right amount of term life insurance can help you gauge a clear idea of the needed scope of coverage.