For many people, the purpose of life insurance is to provide for loved ones and family members after their own deaths. Joint life insurance is one way of fulfilling this goal.
Joint life cover is similar in most respects to other forms of life insurance cover. The key difference is that in joint life cover, two individuals take out cover together. This is usually done by a couple. When the first partner dies, the surviving partner receives a lump sum and the policy ends. For many families, joint life cover is a simple way of insuring that the untimely death of one earner doesn’t mean that the family risks losing its home or going heavily into debt.
Joint life insurance is similar to individual life insurance in many ways. For instance, just like individual insurance policies, joint life cover can have a set value (“level” cover) or decrease proportionally with the amount owed on a mortgage. It can even increase in value to keep up with inflation. Some joint policies pay out on the death of the second partner, although this is a rarer option. Like individual insurance, the exact cost of the premiums and size of the eventual payout are calculated based on the insurer’s assessment of the risk that a payout will be needed.
Although joint life cover offers some advantages for couples, there are a few downsides. In most cases, the policy will pay out on the death of the first partner and then end. Although this means that any expenses incurred by the death of one partner are covered, it also means that the second partner becomes uninsured. If, as in the ideal case, this occurs late in life, finding new insurance cover may be an expensive proposition; insurance premiums for older adults are often high because of the increased likelihood of death. This type of insurance may therefore be more suitable for couples with few dependents, such as families with adult children.
Because premiums can vary between insurance providers, it is also important to compare prices; in some cases, two individual policies may be less expensive than joint cover.