What is Joint Life Insurance? For Better Or For Worse?

Life insurance is an essential way to provide for your loved ones after your death. Taking out insurance as a couple has many advantages over single life insurance, as the following article shows.

Cost

Joint life insurance can be more expensive than taking out a policy for only one person, because of the higher risk of one policy holder dying. However, it is often cheaper to take out joint insurance rather than two separate insurance policies. As premiums vary it is advisable to go to your insurance broker for advice on choosing the best one.

Comparing types of cover

There are several different types of cover when it comes to joint life insurance. The most common type of insurance policy tends to pay out after the first death, while others pay out on the last death. The latter is used for couples in which both individuals have high risk occupations and share assets which will be passed on to the recipient of the money. The loss of one member of a married couple, especially where there are children, is always overwhelming emotional and can be financially devastating. In this case, coverage which pays out on the event of the first death is preferable and can be a safety net for the grieving family.

Inheritance issues

For couples who run a family business together, a joint policy is often the best option to keep the company going after the event of an owner's death. Issues concerning estate resolution can cause interruption to business and in some cases ruin the business completely. It is however, possible to write an insurance policy 'in trust' to avoid facing tax deductions. Thus, the sum of the pay-out is not included in the calculation of the total estate. Writing a couple's life insurance policy in trust is more difficult than for a single insurance policy, however it is by no means impossible.

Disadvantages

As a comparison, there are cases where single policies do offer some advantages over joint ones. The rule concerning 'first death' does not apply and as a result pay-outs happen after each death in a couple, rather than just one. In the event of a marriage breakdown, joint policies can be difficult to change or cancel and can mean higher premiums for both parties. In addition, single life insurance policies can be adapted to suit the requirements of the person taking it out, while the joint life policy has to take both individuals into account.
Most importantly, choosing the right life insurance can be an important step in a relationship - make sure you do your research!