Most couples will be faced with a choice to purchase their own individual life insurance or to buy a joint life insurance policy at some point. A joint life insurance policy insures two, or more, people with the proceeds then payable on either the first or second death to the remaining spouse or their beneficiaries. The benefit of purchasing joint life insurance is that the cost of the policy may be less than that of two separate policies.
Usually joint life insurance policies are purchased on a ‘first death’ basis, meaning compensation is to be paid out if the first person dies. Upon paying out the policy comes to an end leaving the second person without coverage, unlike two single policies that would pay out as each person dies.
Applying for life insurance later in life can prove to be more expensive as many premium increase with age. Those with poor medical histories may also find it very expensive if not impossible to get coverage. Many joint life insurance policies contain similar exclusions to single life insurance policies, limiting the liability of the insurer in cases of suicide, fraud or war.
Those who consider purchasing joint life insurance policies are usually at points in the relationship when they have particular assets to protect. Those purchasing a new home often purchase join life insurance as a form of mortgage protection. It ensures, in the event of death, that the surviving partner can keep up with mortgage payments and maintain any related deaths. It is also a potentially more cost-effective than purchasing mortgage protection insurance.
Couples who have recently become parents may also consider purchasing a joint life insurance policy. If a parent was to pass away the insurance could pay compensation to cover tuition fees or childcare costs. This is generally only applied to children under a certain age.
A joint personal insurance policy can benefit a couple in a number of ways at different stages of their relationship. Couples can have piece of mind that the untimely death of a partner will not spell financial difficulty for the other.
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