Married couples and business partners looking into term life insurance may be better served by purchasing joint term life insurance instead of regular term life insurance. Joint life insurance, like the name suggests, is a type of life insurance policy that covers more than one person. Term life insurance is a type of insurance that only covers you for a specific period of time, as opposed to permanent life insurance that covers you for your entire life.
There are several reasons as to why a couple or partnership would want to purchase joint term life insurance. One reason is because it’s easier to purchase one life insurance policy covering two people than it is to buy a life insurance policy for each person. Another advantage of having a single joint life insurance policy is that you will be paying lower premiums; if you had separate single life insurance policies, your premiums would be higher.
Joint life insurance may also make it easier for one of the parties to get life insurance. The reason for this is because joint life insurance policies tend to be more lenient about their underwriting policies. Take a husband who isn’t in such great health and his wife who is in fantastic shape – if the couple were to get separate policies, the husband would have a harder time getting life insurance. However, under a joint life insurance policy, the wife’s health would be weighed more heavily, and thus, it would be easier for the couple to get insured.
Generally, there are two coverage options available under joint term life insurance: first-to-die insurance and second-to-die insurance. First-to-die insurance pays out when the first person insured on the policy dies. This is a good option for people who want to make sure their families are taken care of, or for business owners who want to make sure their partners have enough money to continue the business.
Second-to-die insurance, sometimes known as survivorship insurance, only kicks in once both the people covered by the policy have died. If your family is going to be in financial trouble after one person’s death, then this probably isn’t the best option for you. However, for families that don’t desperately need the money, this is a great way to leave behind a large inheritance.
Although joint life insurance is a great idea for some people, there are a few cons. For example, if you select the first-to-die insurance option, the second surviving person on the policy may need to purchase additional coverage after the first person’s death. Once the first death occurs, additional money is not paid out upon the death of the second person. In addition, it may be harder to find joint term life insurance because not all insurance companies provide it.