When buying life insurance, you might think it is simply something you need on your own. But when you're married or perhaps in another important partnership, it's probably a good idea for of you to become covered.
You could buy individual life insurance policies, or joint life insurance might meet your needs. Joint life insurance coverage offers coverage for two people for a single premium payment each month.
Here's an introduction to what joint life insurance is, how it works, and the way to decide whether or not this may be right for you.
What is joint life insurance coverage?
Traditional life insurance policies cover only one person; joint life policies are made for 2. Most often, what this means is two spouses, but other situations might also be appropriate for some pot life insurance policy.
Joint life insurance is typically permanent life insurance coverage, which stays in effect so long as you still spend the money for premiums, not a term life policy, whose term ends on the set end date. For the way a permanent joint life insurance coverage is structured, it may build cash value that grows tax-deferred.
These policies can yield a tax-free death benefit and you may increase your policy's features through various life insurance policy riders. For instance, you may add a critical illness rider, which may permit you to take advantage of the death benefit early if you or your spouse is afflicted with a terminal illness. (Another name for this rider may be the accelerated death benefit rider, and it comes free with every Haven Term policy.)
Types of joint life insurance
Joint life insurance policies aren't all the same. For example, you are able to choose between first to die or second to die coverage.
First to die joint life insurance
A first to die joint life insurance coverage works mostly the same way single-person coverage works. When one spouse dies, the surviving spouse receives a death benefit from the policy when the spouse is the beneficiary. The proceeds may be used toward funeral expenses, a mortgage, daily life expenses — by any means the surviving spouse (or joint life insurance policyholder if you aren't married) chooses.
The thing to understand is the fact that once one individual covered by the policy passes away, no further benefits are issued. If you're a surviving spouse, for instance, you'd have to get a new life insurance coverage for yourself if you wish to stay covered. This could be costly or difficult, depending on how old you are and health in those days.
Second to die joint life insurance
Second to die joint life insurance policies, also called survivorship policies, work just a little differently. With this type of joint life insurance, no death benefit is paid out until both parties covered by the policy have died. Then your proceeds are paid towards the policy's beneficiary or beneficiaries.
A second to die policy doesn't net any tangible help to the surviving spouse, apart from the data that their beneficiaries will receive the arises from the policy later on. The surviving spouse is still accountable for make payment on premiums to keep coverage.
Who might want joint life insurance?
Joint life insurance coverage might be an option for newlyweds or married people who don't have life insurance in place yet. An initial to die policy could ensure that a surviving spouse is taken care of financially, while couples could use a second to die policy to produce a financial legacy for their children.
A first to die joint permanent life insurance coverage can also be worth taking into consideration if you want financial protection along with a cash value component, but you do not want two separate policies.
In certain cases, joint life insurance may be less expensive than two separate permanent life policies.
Weighing the professionals and cons
One important thing to consider with any life insurance coverage is cost. A joint life insurance policy might be less expensive than two separate permanent policies should you and your spouse are healthy and young. On the other hand, a joint life insurance policy might cost more if you are healthy but your spouse includes a health issue, or vice versa.
For most people, two separate term life insurance policies will cost just one joint permanent policy, specifically if the face values are equal. Actually, you can usually get more coverage for a lower price if you go for term. Term life insurance can provide an economic safety net throughout the years you need it the most, for example while you are still paying down your mortgage or financing your children's education.
Something else to consider is exactly what happens to the insurance policy when you get divorced. If your policy doesn't include a rider that permits you to split it in 2 in the case of divorce, deciding what to do with your coverage could get messy. Not just that, however, you might take a financial loss if you need to cancel the policy.
Look carefully at what you'll get, and imagine possible outcomes. Sorry to be morbid, but we have to explain when a married couple having a joint life insurance coverage dies together in an accident, there's just one payout.
Look at all the choices for getting insured
Joint life insurance may go well in certain situations, but it's vital that you check all of the angles first. You may find that buying individual term life insurance policies is a better fit for your budget and coverage needs. While you compare joint and single life insurance, remember to element in:
- Your current age and health
- Your spouse's age and health
- The amount of coverage you estimate you'll need
- How long you'll need the policy in which to stay place
- Whether you'd like the option to amass cash value
- The costs of getting insured for term vs. permanent coverage
Term life is generally the more affordable choice, particularly when you're young and in a healthy body. Before committing to any life insurance policy for yourself and/or your spouse, run the numbers.
Calculate your lifetime insurance needs first to obtain a sense of which death benefit is suitable. Then, get a quote to estimate your life insurance costs.
Buying life insurance coverage, as a married couple or any other partnership, is a vital step, particularly if loved ones depend on you financially. Understanding how joint and single life insurance policies can suit your needs can show you toward the policy that's the best fit.