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What is joint life insurance?

When you buy a life insurance policy, you may think that it is just something you need for yourself. But if you are married or in another important partnership, it is probably a good idea for both of you to be covered.

You can buy individual life insurance policies, or a joint life insurance policy can meet your needs. Joint life insurance offers coverage for two people for a one-time premium each month.

Here is an overview of what joint life insurance is, how it works and how you decide if it may be right for you.

What is joint life insurance?

Traditional life insurance covers only one person; joint life insurance policies are built for two. It usually involves two spouses, but other situations may also be suitable for joint life insurance.

Joint life insurance is usually a permanent life insurance, which remains in force as long as your premium payment is updated, not a lifetime insurance, the term of which ends on a certain end date. Depending on how a permanent joint life insurance is structured, it can build up a cash value that grows with tax.

These insurances can provide a tax-free death benefit and you can improve the functions of your joint life insurance through various life insurance policies. For example, you can add a rider with a critical illness, which allows you to use the death benefit early if you or your partner is diagnosed with a fatal illness. (Another name for this rider is the Accelerated Death Benefit, and it is available with all Haven Term policies.)

Types of joint life insurance

Joint life insurance is not the same thing. For example, you can choose between first to die or second to die insurance coverage.

First to die joint life insurance

A joint life insurance that dies first works for the most part in the same way as sole insurance works. When a partner dies, the beneficiary (who in some cases may be the surviving joint life policyholder) receives a death benefit from the insurance. The income can be used for funeral expenses, a mortgage, daily living expenses ̵

1; in whichever way the beneficiary chooses.

The important thing to know is that when a person covered by the joint life insurance dies, no additional benefits are issued. For example, if you are a surviving partner, you will need to obtain a new life insurance policy for yourself if you want to remain covered. This can be expensive or difficult, depending on your age and health at the time.

Others to die joint life insurance

A second to die joint life insurance, also called survivor life insurance, works a little differently. With this type of joint life insurance, no death benefit is paid until both parties covered by the insurance have died. Thereafter, the income is paid to the beneficiary or beneficiaries of the insurance.

A second to die policy provides no tangible benefit to the surviving partner, other than the knowledge that their beneficiaries will receive the revenue from the policy in the future. The surviving partner is still responsible for paying the premiums to maintain coverage.

Who might want a joint life insurance?

Joint life insurance can be an option for newlyweds or married couples who do not have life insurance in place yet. A first to die policy can ensure that a surviving partner (mentioned as a beneficiary) is taken care of financially, while couples can use a second to die policy to create a financial legacy for their children.

A first to die joint permanent life insurance policy may also be worth considering if you want financial protection and a cash value component, but you do not want two separate insurance policies.

In some cases, joint life insurance can be cheaper than two separate permanent life insurance policies.

Weighing the pros and cons

An important thing to keep in mind with a life insurance policy is the cost. A joint life insurance can be cheaper than two separate permanent insurances if you and your partner are young and healthy. On the other hand, joint life insurance can cost more if you are healthy but your partner has a health problem, or vice versa.

For most people, two separate life insurance policies will cost less than a common permanent policy, especially if the nominal values ​​are equal. In fact, you can usually buy more coverage for a lower price if you choose a life insurance policy. Life insurance can provide a financial safety net during the years you need it most, for example when you are still paying off your loan or financing your children’s education.

Another thing to keep in mind is what happens to the insurance if you and your partner buy a joint life insurance policy and then divorce. If your policy does not include a rider who allows you to split it in two in the event of divorce, it can be confusing to decide what to do with your coverage. Not only that, but you can take a financial loss if you have to cancel the insurance.

Look closely at what you get and imagine possible results. Sorry I’m sick, but we have to point out that if a married couple with a joint life insurance dies together in an accident, there is only one payment.

Look at all the options to get insured

Joint life insurance can work well in some situations, but it is important to check all angles first. You may find that buying individual life insurance policies better suits your budget and coverage needs. When comparing joint and single life insurance policies, remember to include:

  • Your current age and health
  • Your partner’s age and health
  • The amount of coverage you estimate you need
  • How long do you need the coverage to stay in place
  • Whether you want the opportunity to accumulate cash value
  • The costs of being insured for maturity versus permanent coverage

Term life is generally the cheaper choice, especially when you are young and in good health. Before you take out any life insurance for yourself and / or your partner, run the numbers.

Calculate your life insurance needs first to get a sense of which death benefit is appropriate. Then get a quote to appreciate your life insurance coverage.

Buying life insurance, such as a married couple or other partnership, is an important step, especially if your loved ones are financially dependent on you. Understanding how joint and single life insurance can meet your needs can guide you towards the coverage that best suits you.

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