What is Joint Life Insurance?

Joint term life insurance allows a couple to be paid upon the first member's death and in some cases the second (known as survivalist and second-death insurance) which can help pay for funeral costs and expenses like caskets and cremation. Joint term life insurance allows you and your spouse the opportunity to be in a program that covers both of you under one plan. It's the most affordable type of group term life insurance because you are both covered under the same plan and you only have to pay one premium (though the premium may be high). Since the program covers both you and your spouse, joint term life insurance is an economical way to provide the protection your family needs. After all, it is impossible to know who will pass first (funeral preplanning will help with this).

When death strikes, the financial burden on the surviving spouse is often overwhelming, but joint life insurance allows for a little less stress. Joint life insurance policies are most often used by spouses and business partners. It provides a type of coverage that is best suited to some sort of interdependent relationship. If one of the members died, the others in the relationship would be left out to dry. Joint life insurance aims to protect against this. There is some variation within the policies, however. Some joint life insurance policies that pay out on the second death as opposed to the first. This is known as survivalist insurance. This type of joint life insurance policy might be used where two people who have high risk occupations have a similar interest in protecting the same people or assets (namely children). For instance, second-death life insurance policies can be used as trusts written in the name of a man and woman's children. When the second parent dies, the children will be able to receive the money without having to go through probate court. You are probably asking if it is better to use a joint life insurance policy with higher premiums, or just buy two individual life insurance policies each for the same amount of coverage.

The answer depends on the circumstances. For one thing, a single joint life insurance policy might cost more than a policy that covers only one death, but two individual policies might add up to more than that one joint's premium. Financial planners usually recommend a joint life insurance policy in business settings; businesses must find every means possible of cutting costs. In fact, it is with regards to business considerations of one form or another that joint life insurance policies are the better option.

Small businesses owned by just two partners, especially family owned businesses owned by husband and wife, can greatly benefit from a joint life insurance policy designed to make sure that the business can continue if one of them dies prematurely. And as the above mentioned instance with the children's trust alludes to, joint life insurance can work great as an estate planning vehicle so that assets don't need to be liquidated should parents die prematurely. Another "business" consideration where joint life insurance may be a great option is in mortgage protection for couples. This would be a good option where one of the spouses doesn't have mortgage protection life insurance (usually in the form of "decreasing term") and an outstanding mortgage balances still exists. However, it is better for each partner in a marriage to have their own life insurance for mortgage protection in the case of the other's death.

In a marriage, there are usually two incomes, and those two incomes are rarely the same. Therefore, one of the spouses would possibly benefit too much and the other possibly too little if a payout had to be made on a joint life insurance policy they held. Furthermore, many marriages don't last nowadays. If a marriage dissolves and both people have their own life insurance, they just carry it with them; if they have a joint policy I doubt they will both be willing to pay the premiums anymore and the policy will lapse, leaving neither one of them covered. If they divorce while there are still minor children to take care of, the children are put at risk as well. Joint life insurance is an excellent idea given the right circumstances.

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