Joint life insurance: is it better together?

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If you have never purchased life insurance before, you may be surprised at the number of options, whether it is term life insurance, permanent life insurance or insurance. whole life, to a multitude of other types, each offering something different. Another option is joint life insurance – as the name suggests, a joint life insurance policy covers couples (married or not). Here, we break down the basics of joint life coverage and identify the pros and cons of this type of insurance.

What is joint life insurance?

Typical life insurance covers a person. Joint life insurance covers two people. This does not mean that joint life insurance pays twice. Depending on the form of joint life cover chosen by the partners, it pays either after the death of the first partner, or does not pay until the death of both partners. In a moment, we’ll explain why someone would want to wait for a payment until both partners are gone.

Here are some highlights on joint life insurance:

  • When available, joint life insurance can be purchased as term life insurance or permanent life insurance.
  • Anyone interested in joint life insurance may have to do considerable research. Few life insurance companies sell joint life insurance.
  • A joint life insurance policy can allow an elderly or unhealthy person to purchase life insurance.
  • For most people, a standard life insurance policy offers a more affordable life insurance option than joint life insurance.

How does joint life insurance work?

With a joint life insurance policy, two people are covered. A single policy binds domestic partners, spouses or even business partners with shared assets. A joint life insurance policy pays only once, and the partners in question determine when they want it. Depending on their wishes, they can take out a “first to die” policy or a “second to die” cover.

First-to-die life insurance

First-to-die coverage means that the policy pays after the death of the first partner. A first-to-die policy is usually purchased by couples with families. The idea is to make sure that the remaining partner and any children are taken care of after the death of the first partner. It can also be purchased by business partners, so the partner left behind doesn’t lose the business the duo built.

The downside to a first-to-die policy is that the remaining partner loses coverage after the policy is paid. Unless they have another life insurance policy, they may find themselves shopping for new coverage.

Life insurance on second death

Second-to-die life insurance may also be referred to as a “survival life insurance policy”. Survival life only pays when both parties are deceased. So why buy this type of joint life coverage?

This couples life insurance works best for those who want to:

  • Providing funds to a child with special needs
  • Leave money to heirs
  • Pay inheritance and inheritance tax after their departure
  • Leave money to charity

A second death policy allows couples to provide money to whomever they want after they die. This type of policy is almost always purchased as a whole or universal life insurance policy rather than a term policy. This is because of the fear that a temporary policy will expire before both parties are deceased.

As you can see, first-to-die life insurance is more about providing life insurance coverage to the partner or spouse. At the same time, a second death policy tends to focus more on providing death benefits to people and making the couple care.

Is it better to take out joint or individual life insurance?

There is no definite answer to the question of what is the best life, partner or single. In most cases, individual life insurance is the easiest solution, but there are circumstances in which purchasing joint life insurance makes sense.

For example, suppose a partner is in poor health and is struggling to qualify for an individual life insurance policy. That person may have a better chance of qualifying for a joint life insurance policy with a younger, healthier partner. This is because the insurance company knows they only have to pay once. If the sickest partner dies and the death benefit is paid, the remaining partner receives the payment, but no longer has life insurance coverage.

This is where working with the best life insurance companies comes in. A good life insurance company helps sort through the circumstances of a person’s life to find the type of policy that is best for that person.

Joint or individual life insurance

Like most financial products, joint and individual life insurance has its advantages and disadvantages. While joint life insurance makes insurance for two people cheaper than two individual life insurance policies, it only pays once. And while a joint policy may allow an unhealthy person to purchase an insurance policy with a healthier partner, it is almost certainly less costly for the healthy partner to obtain a policy on their own. . Here are some other facts worth considering:

The pros of joint life insurance

Here are some of the most attractive features of living together:

  • A first-to-die policy provides money to the surviving partner to cover their financial needs.
  • A second death policy allows couples to decide where they want their money to go after they are both gone.
  • A first-to-die policy can allow a person in poorer health to purchase a policy that includes their healthier partner.

Disadvantages of Joint Life Insurance

Here are some disadvantages of living together:

  • A first-to-die policy may cause the surviving spouse to purchase a new policy after the death of their partner.
  • As strong as the relationship may seem when a duo first takes out a joint life insurance policy, breakups occur and it is not easy to split an insurance policy.
  • If either partner has health issues, it will likely result in a higher joint life insurance premium.

Who should buy joint life insurance?

Joint life insurance is best suited for two groups of people:

  1. Young couples in which both partners work. If they can’t quite squeeze the cost of two individual policies into their budget, it may be a good idea to buy a cheaper joint policy. This way, in the event of death, the surviving partner has funds to help pay for expenses.
  2. Established couples who want to make sure their money goes to the people and causes they care about most after they leave.

The best life insurance for married couples

Typically, the best life insurance for married couples is a term life insurance policy that offers a high death benefit at a low premium. Due to the complexity of splitting a common policy, the easiest solution is for each partner to have a separate policy.

Where can I purchase joint life insurance?

Some insurance companies sell joint life insurance policies, although they are often part of a permanent life insurance plan. Before diving in, it’s essential to know that most financial experts advise against permanent insurance plans, due to their costs and complexity. And when it comes to purchasing life insurance, it pays to make the right choice.


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