If you didn’t know already, you can actually get life insurance cover for two people known as joint life insurance. Joint life insurance is preferred by many couples because it’s cheaper than purchasing two separate life insurance policies. In this article, we’ll be taking a look at how it works and why it can be the best option for couples.
How does joint insurance work?
One type of insurance that protects two persons is called joint life insurance. Like most forms of life insurance, joint life policies pay out a lump sum cash payout when the insured dies. You begin paying your monthly premiums to your provider when you purchase coverage.
Insurance for joint life can be purchased on either a first or second death basis.
- The policy ends after the first death of the couple. If necessary, the policy would be extended to the spouse who is left behind.
- After the death of one or both policyholders, the second death is paid.
Different types of joint life insurance
Joint life insurance can be bought as two types of policy – Whole of Life & Life expectancy:
Whole life insurance covers you for the remainder of your life – it has no expiry date. The premium amount as well as the payout are both fixed during the entire policy.
Whole-life insurance is available as either a regular policy or linked to an investment plan. Your insurer will invest the premiums you pay to secure the payout sum.
You can get bonuses if your investment performs better than you expected. However, premiums could be raised to compensate for the loss.
Term life insuranceYour coverage is limited to a specific time period (e.g. 30 years). If you live beyond the term of your policy, you will lose your protection.
There are three main types of term insurance.
- Level term – Your pay-out amount & premiums remain the same throughout the policy term.
- Decreasing term –It is used for large mortgage payments. You pay down your outstanding mortgage balance and the pay-out amounts decrease over time.
- Increasing term –Inflation can cause the amount of pay-out to increase over time. To compensate, premiums may also rise.
There is also over 50’s life insurance – this is designed for people aged 50 and over who may struggle to take out a standard life insurance policy. The pay-out for this policy is significantly lower than the standard whole life insurance policy.
Is a policy of joint life lasting for long?
The type of policy you select will affect the length of your joint life insurance policy. For example, if you choose a joint whole life policy, the cover lasts for the remainder of your or your partner’s life.
A term policy will cover you for only a certain amount of time, whereas a life insurance policy is permanent.
What are the benefits of joint life insurance for couples?
A joint policy can be cheaper than two separate policies and is easier to administer. Because it is only one person applying, joint policies are easier to establish.
A joint life policy may work better if your partner and you are jointly responsible for the financial affairs of your household. For example, a joint life policy can be used to cover the outstanding balance for your home’s mortgage. The policy pays out to the beneficiary in the event of your death or that of your spouse.
The same applies if you have children – the pay-out can be used to support them during the difficult times ahead. You can get help paying for:
- For household bills
- Everyday living expenses
- Rent or mortgage payments
- Childcare support
- Costs of education such as tuition and fees for school or university
- Funeral costs
- Planning for Inheritance
Even if you don’t have children, a joint policy can support your partner in the event of your death. Before taking out a policy, be sure to assess your family’s financial needs..
Before you can take out any life insurance policy, you’ll need to get a quote from your provider. You can do this online through an insurance broker, or by visiting a comparison website. The quote gives you an idea of how much premiums will cost once your policy is in place.
What happens to the joint life insurance policy following divorce?
Some marriages will end in divorce, regardless of how deeply you love your partner. A divorce or breakup will not have any effect on the coverage you already have.
The provider of your policy will decide what happens to your combined policy. While some insurance companies may permit you to separate the policy, others may deny you the right to do so.
Naturally, this won’t be of any concern when applying for life insurance but it is something to keep in mind for the future.
Joint life insurance can be a good option for married couples, but it also depends on your situation. We don’t want to leave loved ones facing financial hardships. So, get your cover today!
Joint Life Insurance: Is it the best option for couples? Entrepreneurship Life first published this post.