Pros and Cons of Joint Life Insurance

If you’re married or in a domestic partnership, you and your partner might be considering purchasing joint life insurance. But how can you know whether or not this is the right solution for your situation? Knowing exactly what joint life insurance is, as well as what the advantages and disadvantages are of this type of policy, will help you make an informed decision.

What Is Joint Life Insurance?

Joint life insurance is also referred to as spouse life insurance, first-to-die life insurance or survivorship life insurance. It’s intended to provide the surviving partner or spouse with a death benefit if the other spouse or partner passes away. 

Pros of Survivorship Life Insurance

There are several distinct advantages to joint life insurance or survivorship life insurance. First of all, you only need one policy, so there’s less paperwork than if you were to buy two separate life insurance policies. Like with a regular policy, there are options for both permanent and term life insurance. Joint life insurance is usually more affordable, because it’s less costly for an insurer to underwrite. And last but certainly not least, if one of you is a caregiver, there’s a death benefit in the event that partner passes away first. Note that this is critical, since the financial impact of the death of a caregiver is often underestimated.

Cons of Spouse Life Insurance

However, there are also certain drawbacks to joint life insurance policies. As Money Expert advises, there’s only one payout — for the partner who passes away first. If the surviving spouse wants life insurance, he or she will need to take out another policy after the first partner’s death. That often comes at a higher rate, since it usually occurs later in life when any health issues might become a factor. 

In addition, if you divorce, a joint life insurance policy isn’t refundable, so you’d lose all the money you’ve paid into the policy if you split up. If, in contrast, you have two separate policies, all you’d have to do is change the name of the beneficiaries. 

Get Expert Advice From an Independent Life Insurance Broker

If you’re still not sure whether or not a joint life insurance policy is right for you, contact the team here at Liberty Financial Group. We’re an independent life insurance broker, and we can give you objective advice about what your best options are. For more information, please reach out to us today. 

Sources

https://simplelifeinsure.com/life-insurance-pension-benefits/

https://www.moneyexpert.com/life-insurance/joint-life-insurance/

https://www.legalandgeneral.com/life-cover/articles-and-guides/life-insurance-definitions/single-vs-joint-life-insurance.html