Should couples buy separate term insurance plans? Experts explain the pros, cons and key considerations

In today’s rapidly changing world, having basics in check is a vital aspect of proper financial planning. Basics such as a well-planned health insurance policy, term insurance policy, emergency funds and a long-term savings plan have become vital for a secure future. Focusing on these aspects can ensure that an individual leads an objective and meaningful life sans financial worries.

This often raises several fundamental questions, such as: Should an individual invest in separate term plans for themselves and their spouse? How should term insurance planning be focused upon and tackled in the larger scheme of long-term financial planning? Is it at all important?

It is vital to keep in mind that life insurance planning often revolves around the family’s primary earner. Still, experts suggest that such an approach can leave a significant protection gap when considering long-term economic planning . Furthermore, for married couples, it can help ensure that both partners' financial and non-financial contributions are appropriately protected.

At a fundamental level, having a term plan depends on an individual's protection needs and financial obligations. After marriage, as responsibilities increase, the dynamics change a bit. Then it requires taking into account the long-term financial security and obligations of both partners.

Shruti Oke, Senior VP, Head of Product Management, Tata AIA Life Insurance, explains this in detail, stating, “Whether spouses should have separate term plans depends on their individual financial responsibilities and protection needs. Insurance planning has traditionally focused on the primary earner, often overlooking the financial and practical impact of losing a spouse who contributes through caregiving, household management or another source of income. Each partner may have different age, health and risk profiles, responsibilities and future obligations, and therefore may not require identical cover. Separate policies can allow these needs to be assessed independently, including the appropriate sum assured and policy tenure.”

She further added, “The key is to look beyond income alone and evaluate how the absence of each individual could affect the family's financial security, whether through loans, children's education, retirement or dependent care. Families should ensure that protection planning reflects both partners' contributions and responsibilities, rather than leaving one partner inadequately protected.”

Therefore, separate term insurance policies can also provide greater flexibility, allowing each spouse’s cover to reflect their income, liabilities, age, dependents, and expected financial responsibilities. It can also help maintain the financial well-being of the entire family and long-term retirement planning , even in the absence of one spouse.

Therefore, it is clear that with rising inflation and healthcare costs , protection planning requires prioritising the needs of both partners. It is no longer an individualistic exercise.