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Why Buy Joint Life Insurance
Article 5 of 12 in Is Life Insurance Right For Me?
A joint life insurance policy is an option for couples who would like to provide for each other should one of them pass. Life insurance for couples is an important part of financially supporting your companion, and purchasing a joint life insurance policy can be a simple, affordable, and effective way to meet your needs. Before you purchase, know your options and find the best policy for you and your spouse.
Joint Term Life Insurance
A joint term life insurance policy is a convenient way to cover two people on one policy. It provides a level death benefit for two people for one premium. It allows the owner of the policy to have the ability to name each other as beneficiaries. The policy will operate just like a term life insurance policy in that it will last a certain number of years and the entire premium payment will support the death benefit amount. There are several benefits to term life that make a joint term plan an attractive options for you and your spouse.
Types of Joint Life Insurance
There are two kinds of Joint Life Policies: first to die and second to die.
- First to die life insurance policies pay the death benefit only on the first insured to die. Therefore if husband and wife were covered under this type of policy, with a death benefit of $250,000 and the husband dies first, the wife would get the death benefit of $250,000. The policy would then be exhausted. This could also be great mortgage life insurance as when the first dies, the death benefit would pay off the mortgage for the remaining insured to live mortgage free.
- Second to die life insurance policies or survivorship policies pays on the second to die. In the scenario above where the husband has died, the policy would not have paid until the wife died leaving the death benefit to their named beneficiary. Second to die life insurance also insures two or more people for one premium. Since the death benefit is not paid until the last insured dies, the life expectancy for the policy is based on a longer life expectancy which allows for a lower premium. Also called survivorship policies, they are popular for many situations. Often, couples or non married partners who are retired and do not rely on each other for income will buy a survivorship policy to help their children with estate taxes. They are also bought in business partnerships where after the last partner dies, it is used to pay any business expenses.
TIP: Don't be afraid to ask an experienced agent for advice before you decide what type to purchase.
Is Joint Life Insurance Right for You?
There are some pros and cons to having joint life insurance. Decide if this is right for you and consider the following points:
- Premiums are usually lower with joint life insurance policies than they would be if you were to buy two separate policies.
- Not all companies provide joint life insurance. Look for companies that carry this type of policy that have an excellent rating. Check the Free Advice insurance company rating site and stick with companies that have an AA+ to A rating.
- Additional coverage may be required. If you have first-to-die insurance, the survivor may need to buy an additional policy after the first death to cover expenses. If you feel that will be your situation, ask your agent about a small policy that will cover each individual and purchase that now. It will be only more expenses as you age.
- Health differences or large gap in age between the insured parties may lead to the younger, healthier insured paying more for coverage than he or she would under an individual policy. Weight out your options. Remember, on the first to die, the younger person would then have to go get insurance at an older age.
Divorce and Joint Life Insurance
Keep in mind, insuring two lives is cheaper than what you would pay to insure both separately. However, it can become a sticky situation if the married couple divorces. Then you have a joint policy on your ex-husband or ex-wife! In the scenario where there are kids, it might be good to discuss setting up a trust where the money can be allocated for the kids in years to come. If the two decide that continuing the joint policy would not be in their best interest, both will now be looking for more insurance at an older age and perhaps not at optimal health, which could increase the premium payments.
Consider all the pros and con before purchasing a joint life insurance policy. Discuss this type of policy with a life insurance agent that can determine if it is right for you. Get an affordable joint life insurance policy quote today! Click here to get started at the Free Advice quote center.
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