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.

Why both spouses need to think about term insurance

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.

Your spouse’s contribution may be worth more than their salary

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. It is also important to stay vigilant and financially aware of one’s rights and responsibilities in order to ensure meaningful long-term life insurance planning.

The key here is to acknowledge that financial planning is not just about investing and saving money; it is about adopting a holistic approach to life. It is about focusing on health, finance, family well-being, and other vital aspects of life together.

Sunny Bhatia, EVP and National Head of Sales, Turtlemint, touched upon this aspect, stating, “We are witnessing a gradual shift from individual protection planning towards a more holistic approach to family financial security. Traditionally, life insurance has been associated with replacing the income of the primary breadwinner, which has often left non-earning spouses and other dependents underinsured. However, families are increasingly recognising that both partners contribute meaningfully to the household, whether through income, caregiving or managing family responsibilities.”

He further added, “This is particularly visible among dual-income households, where customers are increasingly considering protection for both spouses to safeguard their lifestyle and long-term financial goals. Greater financial literacy, access to professional advice and digital tools are also helping consumers better understand and assess the protection needs of different family members. The focus should be on evaluating each person’s role, responsibilities and financial impact on the family rather than basing insurance decisions solely on formal income.”

Should both partners have separate term plans?

The answer to this question cannot be a straightforward yes or no. This is because eventually, there is no one-size-fits-all resolution to this question. Couples should sit down and discuss all aspects of personal finance planning. They should assess each partner’s economic and household contributions, liabilities, current situation, and future goals before deciding on appropriate cover.

Further, separate term insurance planning can provide them with a more comprehensive safety net, ensuring that the family’s finances remain robust even when one partner is no longer around to support and contribute to the other’s life. Finally, in case of doubt, it is prudent to seek advice from a certified financial advisor to make the best possible decision on a case-by-case basis.

Disclaimer: This article is for informational purposes only and does not constitute financial or insurance advice. Insurance needs vary based on individual circumstances; readers should assess their requirements and consult a qualified financial adviser before making any insurance decision.