All About a Joint Life Insurance Policy

Having life insurance is a wise financial choice, but determining what type of policy you need can be daunting. Some couples consider a joint life insurance policy because it simplifies the process and ensures two people under one policy. Here’s the basics of a joint life insurance policy.

First-To-Die Option

In a joint life insurance policy, insurers can choose the “first-to-die” option which means that the policy will be paid in lump sum upon the first death of one of the policy holders. This allows the surviving policy holder to cover any medical expenses, such as house payments, monthly living expenses, childcare, debts and medical expenses. In some cases, first-to-die can be added to an existing insurance policy.

Second-To-Die Option

The second-to-die option of a joint life insurance policy will pay the benefit once both of the insured individuals have died. This type is often used for those who want to ensure their children or younger loved ones are taken care of in the event of both of the insurers deaths. It is also typical for those who have a large inheritance and want to make sure it stays in the family. Second-to-die joint life insurance is smart for family business owners or those who have dual-house incomes.

Benefits of a Joint Life Insurance Policy

There are many benefits to having a joint life insurance policy. For one, premium payments are typically lower on a joint life insurance policy then having two basic life insurance policies. They are more tolerant of health issues and may make it easier to get a policy if one person is healthier than the other. Joint life is usually offered in whole life or term life with the option to switch the additional person.

Disadvantages of a Joint Life Insurance Policy

The first drawback to having a joint life insurance policy is when the first insured dies, the remaining insured individual may have to purchase another policy, especially if children or other dependents are involved. If one of the insured has more health issues than the other, the healthier individual may end up paying more for the joint life insurance policy then if they had an individual life insurance policy. Joint Life insurance policies are rare and not all companies may offer them.

Criteria for a Joint Life Insurance Policy

In addition to being married, a joint life insurance policy may have some specific criteria in order for a couple to purchase it. The couple must be married or legally registered as civil partners. The couple usually has to be living together with shared financial responsibilities, such as children or house payments. Other criteria includes that the couple may be in a joint financial relationship, such as a family business partnership.

A joint life insurance policy may be the answer if you’re a couple looking to both be insured. In some cases, the policy may be cheaper than having two individual life insurance policies, but as with many policies, there are many advantages and disadvantages.