I got a mail from one of the reader regarding some explanation on Joint Life Insurance policies . His questions were
1. Joint life Insurance policies are also available in the market! What is the significance of these policies? Under which circumstance, it should be considered?
Ans : They are generally same as normal Endowment polices , but with fact that in this both husband and wife are covered . Joint Life Insurance is designed mainly for married couples. So that when one of them dies , the other person gets the insurance money.
Now it does not make sense to take this if anyone spouse is not working and earning , because anyways , you will not be financially impacted (Don’t think in a way that even if he/she dies you will at least get some money , that’s a wrong reason to take Insurance) .
these policies are again policies which return you your money at the end , This is a fundamental mistake with any Insurance policy . Insurance products should only cover your risks. Now i will not advocate to buy this kind of policies .
You can only consider to buy Joint Life Insurance products if they are Term Insurance products (Joint Term Insurance Policy) . But that too has some limitations .
What if there is Divorce ?
No one will think this , but what if some years down the line , there is divorce , that couple suddenly become enemies other each other . This can lead to many problems .
2. Lastly, whether it has any edge on two separate individual policies, if we compare?
I dont think Joint Insurance policies have any edge over two separate policies, The counter argument can be that they are a single policy and easily manageable .But how tough it is to manage two policies . Idiot people look for products who are afraid of managing the documents and tracking them . Smart people concentrate on buying smart products and manage it well .
One more problem with Joint products is that you are stuck . What if at the time of taking the policy both people where earning money (so they required Joint insurance) , but later after 2 yrs one of them starts working and brings no money home . Now what happens . there is no need to cover the other person now . You cant just stop other person’s share of premium . But two separate term policies for each of them would have worked brilliantly . You can just stop one policy any time you want without loss .
Summary :
Understand , You financial life will become just like the products you take .
Take easy and simple things and make your life easy . Don’t complicate your life by taking ULIPS for short term , Endowment polices and things like those .
