What Is Joint Life Insurance 

What Is Joint Life Insurance

What is joint life insurance? This life insurance is the type that is built for both spouses. Joint life insurance has many benefits for couples, but there are still factors that should be considered before purchasing a policy. Always explore the pros and cons of any insurance policy so that you can determine if it is the best fit your you.

How Does Joint Life Insurance Work?

Joint life insurance can work in two ways, first-death basis or second-to-die (survivorship policy). Here is a quick break down of both variations:

First-death This means that the payout will cover the first spouse who dies. This can be a reliable source of income if the person who dies is the main breadwinner. This type of coverage is an option for life insurance for a stay at home spouse.
Second-to-die (Survivorship) This is payable once both policy-holders die. They payout will go to the designated beneficiaries, much like any other policy. This insurance cannot be viewed as an income replacement since there can be a significant amount of time before both spouses pass away. But it is a good way to settle estate and tax issues after the spouses die.
What Is Joint Life Insurance

What Are The Pros And Cons Of Joint Life Insurance?

Joint life insurance works for the specific needs of the policy holder. Both first-death and second-to-die have advantages and disadvantages.

Pros and Cons of First-Death Joint Life Insurance

  • The primary earner will be insured. This will help if there is an issue with income replacement after the insured dies.
  • It can be used to pay off debts. If the family in question is younger, has children, a mortgage, or other major bills, the first-death policy could provide the lump-sum payment needed to carry on.
  • If you have a business, it can pay off a small business loan. Often times, a person who dies has a business partner. The death of the individual could land the business in financial disarray. The death benefit payout will keep the business afloat.
  • Double payout if both spouses die at the same time. If there is some unfortunate occurrence such as both parties dying in a car accident or plane crash, the payout will automatically double. However, some policies may state that the deaths can occur within 30, 60, or even 90 days of one another.
  • The policy lacks flexibility. In some extreme cases, individuals may want to split their policy. Joint policies will not allow that type of flexibility.
  • There can be difficulty getting preferred rates. With a joint policy, both parties have to qualify. There may be strict rules regarding weight, blood pressure, and other health issues. If one qualifies for preferred rates and the other party does not, the insurer will automatically charge the standard rate.

Pros and Cons of Second-to-Die Policy

  • Can be less expensive. This is always the case when it comes to insuring two individuals at the same time as opposed to the individuals having two separate policies. And since no benefit will be paid out until both of the insured die, the risk for the insurance company is significantly less.
  • The qualification process can be easier. Again, two lives together instead of one is less risky. The insurance company will often focus on the younger and healthier of the two policy holders.
  • It provides estate security. If the estate is burdened with taxes, the insurance will be able to help mitigate the issue.
  • No payout until second death. There is no safeguard in terms of money. This could cause further financial hardship.
  • The premium payment could be affected by marital changes. The policy will remain in effect without change even if the couple gets a divorce.
  • No cash value growth. The focus will not be on the case value. Instead, the benefit is designed to produce the largest benefit.

Life Insurance Agents Can Help Your Search

After exploring your options, you may find that joint life insurance fits your needs and lifestyle. It is important to think about the implications and how they can effect you in the long run. Even if you are not married, you should consider buying life insurance for unmarried couples as well. Many couples may ask 'What is joint life insurance?' In order to find that answer, they should speak with an insurance broker. They can offer a better understanding of how first-death and second-to-die insurance works, and also help shop around different carriers to get the most competitive pricing. Find a life insurance agent online with us today and see how easy it can be to get the coverage you need.

Disclaimer: TermLifeInsuranceUSA.com is not a licensed insurance agency or broker. The content of this website is for informational and comparative purposes only and is not intended to take the place of professional advice from a licensed insurance agent. TermLifeInsuranceUSA.com recommends that all consumers consult with a licensed insurance agent before purchasing any insurance policy.

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