Joint life insurance seems to be one of the most obvious choices for couples. But wait: like opening a joint bank account, you and your spouse/partner need to be aware of the implications. Sometimes, it may very well be a better decision to take out two separate policies rather than a single, joint one.
Joint life insurance policies between couples (whether married or unmarried) can have a whole range of benefits that two singles policies may not be able to fulfill. But it is still important to realise that there may be implications you’re not aware of. For this reason, we would advise those considering joint life insurance to look closely at the options.
Joint Life Insurance Policies and Their Advantages
Probably one of the most obvious advantages is convenience. After all, you’ll only have to deal with a single provider. It means far less paperwork and only one provider to pay. What obviously attracts many people is the fact that you’ll probably pay a much lower premium in the long run. This is especially true if you haven’t got any dependents to consider.
But as with anything, joint life insurance policies have their disadvantages…
So, what are the disadvantages of joint life insurance?
Your joint life insurance policy may be cheaper -and more convenient- but there could be more downsides than advantages. This is particularly true in the case of those who have dependents. In general, a joint policy will only pay out once: it means that if your spouse dies, you get the payout. But once you die, no more money will be paid out.
On the other hand, those with separate life insurance policies will receive two payouts.
For those with dependents, it is usually the better choice. Of course, joint life insurance could still be an option. After all, joint policies may pay out double the money.
Things to Consider: The “Second Death” Policy
For those looking into joint life insurance, the “second death” policy needs to be considered. That is to say that when one partner dies, the second won’t receive a payout. The payout only occurs when both partners have passed away. Most people tend to use these for the purposes of inheritance.
Generally speaking, most joint life insurance contracts pay out after the first death.
Things to Consider: Children in later life
Circumstances can certainly change, and you may end up having children in later years. If you’ve already taken out joint life insurance, it’s worth knowing that you can still add multiple policies. Keep this in mind: policies tend to be more expensive the older you get. Keeping your joint policy plus having a second could be worth it for your family.