Should we buy joint life insurance?
We get asked hundreds of questions each week here at Life Insurance Quotes and we do our best to answer as many as we can. One question this week asked us whether a couple would be better off buying a life insurance policy each, or buying a joint life insurance policy together.
We thought it was a great question and at first glance the answer seems very obvious. By buying a joint life insurance policy you are both covered, and you’ll pay less for a joint life insurance policy than you would if you bought two separate life insurance policies. The cost benefits are obvious but it’s only when we looked more closely into the idea that we started to see the drawbacks.
Whilst a joint life insurance policy may cover both of you sufficiently if you have similar incomes, if one family member earns 80% of the household income, then you may both need different levels of cover, something not offered with one large policy.
You may also find that the insurance company will not allow you to split the policy if you were to break up or fall out further down the line, forcing you to cancel your policy, and to pay the premium paid by individuals taking out life insurance when they are older.
Another potential area of contention is the fact the life insurance policy will only pay out once, so once one half of the couple has died, the other half no longer has life insurance. They’d then have to buy new life insurance, which again will cost more the older they are.
You’d also have to take into account the possibility of both partners dying at the same time, and making sure that the value of the life insurance policy was equal to two combined policies, as you don’t want to leave your children short of money if the worst did happen.
There are many pros and cons to any form of insurance policy but whilst joint life insurance looks like a great idea on the surface, and is certainly a worthy insurance policy, we just wanted to make sure customers were aware of the possible drawbacks of such a policy.